E5-4 (Algo) 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 to 1,700 units, and monthly production costs for the production of 1,400 units follow. Morning Doves utilities and maintenance costs are mixed with the fixed components shown in parentheses.

Production Costs	Total Cost
Direct materials	$ 1,700
Direct labor	7,100
Utilities ($120 fixed)	580
Supervisors salary	3,200
Maintenance ($320 fixed)	540
Depreciation	800

1. Identify each cost as variable, fixed, or mixed, and express each cost as a rate per month or per unit (or combination thereof).
2. Determine the total fixed cost per month and the variable cost per unit for Morning Dove.
3. State Morning Doves linear cost equation for a production level of 0 to1,700 units. Enter answer as an equation in the form of y = a + bx.
4. Calculate Morning Doves expected total cost if production increased to 1,600 units per month. Enter answer as an equation in the form of y = a + bx.