Question
BrightStar Inc. needs to evaluate the behavior of three different costs over three months. Month Units Produced Total Cost X Cost per Unit X Total
BrightStar Inc. needs to evaluate the behavior of three different costs over three months.
| Month | Units Produced | Total Cost X | Cost per Unit X | Total Cost Y | Cost per Unit Y | Total Cost Z | Cost per Unit Z |
|---|---|---|---|---|---|---|---|
| 1 | 2,500 | $5,000 | $7,500 | $10,000 | |||
| 2 | 5,000 | $5,000 | $10,000 | $20,000 | |||
| 3 | 1,250 | $5,000 | $5,000 | $5,000 |
Required: a. Calculate the cost per unit for each cost and determine whether each cost is fixed, variable, or mixed. Justify your answers.
b. Explain how understanding cost behavior can influence managerial decisions regarding production levels.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Cost Behavior Analysis Lets start by calculating the cost per unit for costs X Y and Z for each month Then we will determine whether each cost is fixe...
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Step: 2
Step: 3
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Calculus
Authors: Ron Larson, Bruce H. Edwards
10th Edition
1285057090, 978-1285057095
