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ENZ Manufacturing Company manufactures water filters at a selling price per unit of $60. The following information is available regarding costs at 7,000 units and
ENZ Manufacturing Company manufactures water filters at a selling price per unit of $60. The following information is available regarding costs at 7,000 units and 10,000 units of monthly production for 2021: Production volume 7,000 10,000 Factory supervisors' salaries $12,000 $12,000 Direct labour 56,000 80,000 Indirect labour and materials 21,000 30,000 Depreciation on machinery 10,000 10,000 Electricity 15,000 21,000 Direct materials 70,000 100,000 Rental of factory Total 16,000 16,000 $200,000 $269,000 (a)(i) Classify the cost (variable, fixed, or mixed) by writing the name of each cost under one of the following headings: Variable Cost Fixed Cost Mixed Cost XX XX XX (a)(ii)Explain the cost behaviour of the costs classified under each of the above respective headings. (6 marks) (b) Develop a monthly cost formula for each of the mixed cost identified in part (a) above. Show all workings. (4 marks) (c) Calculate the expected total costs for the first quarter of 2022 if ENZ forecasts to produce a total production volume of 28,000 units. (6 marks)
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