Arizona Corporation is interested in estimating fixed and variable manufacturing costs using data from October, a typical month. Total production for the month is estimated at 1,200 units. Based on judgment, previous experience and some analysis of what things are in the manufacturing Costs account, they have classified each manufacturing cost as fixed, variable, or part fixed and part variable, as follows: Cost Amount Behavior Material $ 50,400 Variable Direct labor 19,200 Variable Depreciation 9,000 Fixed Phone 300 Fixed Other utilities 4,200 20% Fixed Supervisory salaries 25,200 75% Fixed Equipment repair 7,500 20% Fixed Indirect materials 540 Variable Factory maintenance 3,000 80% Fixed Total $ 119,340

Required: 1. What is meant by the term account analysis as it relates to analyzing mixed costs? 2. Use the information above to do account analysis and estimate fixed cost per month and variable costs per unit produced. 3. What would be the cost function that the company would use to estimate the manufacturing costs? 4. If the company made an additional 300 units, what would be the incremental cost of making those extra units? 5. Does this sound like a good way to do it? What would be the advantages and disadvantages of approaching the cost estimation in this manner? When would it be advisable to use this method?