Bendix Ltd is a car parts manufacturer. It supplies you the following information regarding costs at various levels of monthly production:

Production volume	8 000 units	12 000 units
Direct materials	$80 000	$120 000
Direct labour	64 000	96 000
Indirect materials	24 000	36 000
Supervisors salaries	12 000	12 000
Depreciation on plant	10 000	10 000
Maintenance	32 000	44 000
Utilities	15 000	21 000
Insurance on plant and equipment	1 600	1 600
Property taxes on plant	2 000	2 000
Total	$241 600	$342 600

In the above table there are some pure variable costs, some pure fixed costs and some mixed costs.

Required:

1. Identify and make separate lists of the pure variable costs, pure fixed costs and mixed costs and calculate their totals.
2. Split the total mixed costs into Fixed and Variable elements using High/Low method, calculate total fixed cost and develop the equation for total monthly production costs?
3. Explain to the management how to use the cost equation you developed in (2) above to predict total costs for the monthly production volume of 9 000 units and also calculate the correct unit cost.
4. In 2019 the company has produced 9 000 units. According to the Accountants calculations the unit cost was $28.05 ($336 600 / 12 000). The company added 10% margin to the cost and had set a selling price of $30.85.

However, the financial results show that there was a gross loss in the year. The company management cannot understand this mystery.

Explain to the management why there was a loss.