3. Mailbox Magic produces decorative mailboxes. The company's average cost per unit is $26.43 when it produces 1,600 mailboxes. Read the requirements? Requirement 1. What is the total cost of producing 1,600 mailboxes? The total cost of producing 1,600 mailboxes is Requirement 2. If $21,488 of the total costs are fixed, what is the variable cost of producing each mailbox? The variable cost per unit is Requirement 3. Write Mailbox Magic's cost equation. y = X + Requirement 4. If the plant manager uses the average cost per unit to predict total costs, what would the forecast be for 1,700 mailboxes? The total cost is Requirement 5. If the plant manager uses the cost equation to predict total costs, what would the forecast be for 1,700 mailboxes? The total cost is Requirement 6. What is the dollar difference between your answers to Questions 4 and 5? Which approach to forecasting costs is appropriate? Why? The plant manager's forecast would be too high if he/she uses the (1) to predict costs. The (2) is based on a mixed cost that will change as volume changes. If the manager uses this method, he/she is erroneously assuming that the (3) does not change at different volumes. The manager should use the (4) to predict costs since it correctly takes into account the variable and fixed components of producing mailboxes. 1: Requirements 1. 2. 3. What is the total cost of producing 1,600 mailboxes? If $21,488 of the total costs are fixed, what is the variable cost of producing each mailbox? Write Mailbox Magic's cost equation. If the plant manager uses the average cost per unit to predict total costs, what would the forecast be for 1,700 mailboxes? If the plant manager uses the cost equation to predict total costs, what would the forecast be for 1,700 mailboxes? What is the dollar difference between your answers to questions 4 and 5? Which approach to forecasting costs is appropriate? Why? 4. 5. 6. (1) (2) (3) (4) average cost per unit O cost equation O total cost average cost per unit O cost equation O total cost O average cost per unit O cost equation O total cost average cost per unit O cost equation O total cost