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E5-2 Determining Cost Behavior and Calculating Expected Cost [LO 5-1] Morning Dove Company manufactures one model of birdbath, which is very popular. Morning Dove sells
E5-2 Determining Cost Behavior and Calculating Expected Cost [LO 5-1] Morning Dove Company manufactures one model of birdbath, which is very popular. Morning Dove sells all units it produces each month. The relevant range is 0-1,600 units, and monthly production costs for the production of 1,200 units follow. Morning Dove's utilities and maintenance costs are mixed with the fixed components shown in parentheses. Production Costs Direct materials Direct labor Utilities ($140 fixed) Supervisor's salary Maintenance ($340 fixed) Depreciation Total Cost $ 2,500 7,100 560 2,500 480 800 Required: 1. Identify each cost as variable, fixed, or mixed, and express each cost as a rate per month or per unit (or combination thereof). (Round your per unit value to 2 decimal places.) Behavior Production Costs Direct Materials Direct labori Utilities Rate per Unit per Unit per Unit per Unit per Unit per Unit per Month per Month per Month per Month per Month per Month Supervisor's Salary Maintenance Depreciation 2. Determine the total fixed cost per month and the variable cost per unit for Morning Dove. (Round your variable Total Variable Cost per Unit Total Fixed Cost per Month 3. State Morning Dove's linear cost equation for a production level of 0-1,600 units. Enter answer as an equation in the form of y = a + bx. (Round your variable cost per unit to 2 decimal places.) Total Cost = + 1x 4. Calculate Morning Dove's expected total cost if production increased to 1,400 units per month. Enter answer as an equation in the form of y = a + bx. (Round Variable cost per unit to 2 decimal places.) a + b X X = y
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