Chapter Cost Behavior and Furecasting Use the follosing inform.ation for Exerises 3-37and 3-38 Alisha Incorporated manufactures medical stents for use in heart bypass surgery, Based orn past experience. Alisha has found that its toral maintenance costs can be represented by the following Stents. Last year, Alisha produced 50,000 stents. Actual maintenance costs for the year were as expected. (Note: Round all answers to two decimal places.) formula: Maintenance Cost . $ 1.750,000 + S 1 25X, where X-Number of Heart Exercise 3-37 Cost Behavior Refer to the information for Alisha Incorporated above. OBJECT Required: 1. What is the total maintenance cost incurred by Alisha last year? 2. What is the total fixed maintenance cost incurred by Alisha last year? 3. What is the total variable maintenance cost incurred by Alisha last year? 4. What is the maintenance cost per unit produced 5. What is the fixed maintenance cost per unit? 6. What is the variable maintenance cost per unit? 7. CONCEPTUAL CONNECTION Briefly explain how Alisha management could improve its cost function to better understand past maintenance costs and predict furure mainte- nance costs Exercise 3-38 Cost Behavior OBJEC Refer to the information for Alisha Incorporated above. However, now assume that Alisha produced 25.000 medical stents (rather than 50,000). Required: 1. What is the total maintenance cost incurred by Alisha last year? 2. What is the total fixed maintenance cost incurred by Alisha last year? 3. What is the total variable maintenance cost incurred by Alisha last year? 4. What is the maintenance cost per unit produced? 5. What is the fixed maintenance cost per unit? 6. What is the variable maintenance cost per unit? 7. CONCEPTUAL CONNECTION The number of stents produced in Exercise 3-38 (25,000) is only half of the number produced in Exercise 3-37 (50,000), yet the main- tenance cost per unit (see Requirement 4) is larger in Exercise 3-38 than in Exercise 3-37. Briefly explain why Alishas maintenance cost per unit in Exercise 3-38 is different than in Exercise 3-37. Should Alisha's management use maintenance cost per unit to make decisions? OBJ Exercise 3-39 Step Costs, Relevant Range Bellati Inc. produces large industrial machinery, Bellati has a machining department and a group of direct laborers called machinists. Each machinist can machine up to 500 units per year. Bellati also hires supervisors to develop machine specifcation plans and oversee production within che machining department, Given the planning and supervisory work, a supervisor can oversee, at three machinists. Bellatis accounting and production history shows the following rela- most, tionships between number of units produced and the annual costs of supervision and materials handling (by machinists) Continued) Exercise 3-38 Cost Behavior Refer to the information for Alisha Incorporated above. However, now assume that Alisha produced 25.000 medical stents (rather than 50,000). OBJEC Required: 1. What is the total maintenance cost incurred by Alisha last year? 2. What is the total fixed maintenance cost incurred by Alisha last year? 3. What is the total variable maintenance cost incurred by Alisha last year? 4. What is the maintenance cost per unit produced? 5. What is the fixed maintenance cost per unit? 6. What is the variable maintenance cost per unit? 7. CONCEPTUAL CONNECTION The number of stents produced in Exercise 3-38 (25,000) is only half of the number produced in Exercise 3-37 (50,000), yer the main- tenance cost per unit (see Requirement 4) is larger in Exercise 3-38 than in Exercise 3-37. Briefly explain why Alisha's maintenance cost per unit in Exercise 3-38 is different than in Exercise 3-37. Should Alisha's management use maintenance cost per unit to make decisions
