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1. Smith Tooling Inc. manufacturers and sells tools and equipment for business and retail customers. For their main products, the Company incurs approximately the following

1. Smith Tooling Inc. manufacturers and sells tools and equipment for business and retail customers. For their main products, the Company incurs approximately the following per unit costs:

? $12.75 in Direct Materials

? $21.90 in Direct Labor

? $3.87 in Electricity

? $4.21 in Rent Expense for their Retail Store

Which of the above costs would be including in Manufacturing Overhead? Why?

2. What concept is being portrayed in the following graph?

image text in transcribed
COSTS PER PASSENGER MILE 0.35 $0.31 0.30 0.25 $0.24 $0.205 Average 0.20 Average variable init cost (10 cents per mile $0.21 total unit cost Cost per mile (dolars) 0.15 $0.14 Average 0.10 $0.105 fixed unit cost 0.05 200,000 300.000 400,000 Passenger miles per month

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