Assume that monthly electricity costs (based on the cheapest electricity provider) and production levels from Part 1 are siven as historical data. Complete this table and answer required questions using the following assumptions: . Direct material cost per cake is 60 cents . Each cake requires 10 minutes direct labour work and the labour rate is $24 per hour Use the total number of cakes as the cost driver The relevant range is between 6,s00 and 9,800 cakes. omc 60 4 - . Total Electricity tota Month Cotelctricityent) expenses ot t 1 9,500 SAVIL 3,0008,800 38 000 3 7.500 $2163,000 8,003 43DO 30,00 Cakes expenses material labou 9,500 4 6.500 000 7,500 0D 126,000 3,000 9,676 8 8,300 $360V 3,00010,007 4990 33O 9- 8,500 11.14.14| 3,000 | 8,544 IS 100 34,000 10 I 9,000 E&rs.E 3,000-?10,454 9,400 3,000 9,900 5SuD ,bo ired: 1. Use your judgement to classify costs as fixed, variable or mixed. Explain your basis for your classification. Draw a graph for each cost to demonstrate its behaviour using scatter diagram Estimate the total cost formula (monthly).for the bakery using the high-low and regression methods for mixed costs 2. 3. 4. Estimate the cost of producing 900 and 9,900 cakes per month using the Icost formulas based on both regression and high-low methods. Explain your results tal Page 3 Assume that monthly electricity costs (based on the cheapest electricity provider) and production levels from Part 1 are siven as historical data. Complete this table and answer required questions using the following assumptions: . Direct material cost per cake is 60 cents . Each cake requires 10 minutes direct labour work and the labour rate is $24 per hour Use the total number of cakes as the cost driver The relevant range is between 6,s00 and 9,800 cakes. omc 60 4 - . Total Electricity tota Month Cotelctricityent) expenses ot t 1 9,500 SAVIL 3,0008,800 38 000 3 7.500 $2163,000 8,003 43DO 30,00 Cakes expenses material labou 9,500 4 6.500 000 7,500 0D 126,000 3,000 9,676 8 8,300 $360V 3,00010,007 4990 33O 9- 8,500 11.14.14| 3,000 | 8,544 IS 100 34,000 10 I 9,000 E&rs.E 3,000-?10,454 9,400 3,000 9,900 5SuD ,bo ired: 1. Use your judgement to classify costs as fixed, variable or mixed. Explain your basis for your classification. Draw a graph for each cost to demonstrate its behaviour using scatter diagram Estimate the total cost formula (monthly).for the bakery using the high-low and regression methods for mixed costs 2. 3. 4. Estimate the cost of producing 900 and 9,900 cakes per month using the Icost formulas based on both regression and high-low methods. Explain your results tal Page 3
