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Alpha Manufacturing Co. Scenario: Cost Behavior Analysis Cost Category Fixed Cost ($) Variable Cost per Unit ($) Activity Level (Units) Production Costs 120,000 8 15,000
Alpha Manufacturing Co.
Scenario: Cost Behavior Analysis
Cost Category | Fixed Cost ($) | Variable Cost per Unit ($) | Activity Level (Units) |
Production Costs | 120,000 | 8 | 15,000 |
Selling & Admin Costs | 80,000 | 5 | 20,000 |
Requirements:
- Cost Behavior Classification:
- Classify each cost category (Production Costs and Selling & Admin Costs) as fixed or variable based on the provided data.
- Total Cost Calculation:
- Calculate the total cost for Alpha Manufacturing Co. at the activity levels of 15,000 units and 20,000 units using marginal costing principles.
- Cost-Volume-Profit (CVP) Analysis:
- Perform a CVP analysis to determine the breakeven point in units and dollars for Alpha Manufacturing Co. using marginal costing, assuming a selling price of $30 per unit.
- Contribution Margin Calculation:
- Compute the contribution margin per unit and contribution margin ratio for Alpha Manufacturing Co. based on the provided cost structure.
- Cost Estimation:
- Estimate the total production costs if Alpha Manufacturing Co. plans to produce 25,000 units using marginal costing, considering the fixed and variable cost components.
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