Exercise One

Exercise Two

Model Car Co. produces high-quality model cars that are sold in hobby shops. The controller and sales manager are discussing potential price increases and have started looking at various costs to consider their potential impact on price. The following are several of the costs they are discussing. Advertising Packaging (each model car is carefully packaged in a nicely designed collectable carton) Supervisors' salaries Metal panels (each model car has unique panels) Assembly labour Mortgage payment on the production facility Production facility utilities Quality assurance (each model car is carefully inspected). REQUIRED Assist the controller and sales manager by indicating whether each of the above costs is most likely a fixed cost (FC) or a variable cost (VC). Intercom Pty Ltd provides custom creation of intercoms for large apartment blocks. The company has recently become concerned about its ability to plan and control costs. John Isaac, the company's founder, believes that he can summarise the company's monthly cost with a simple formula that appears as: Cost = $32 400 + $35.00 per labour hour. REQUIRED If Intercom Pty Ltd employees work 450 hours in a single month, calculate an estimate of the company's total costs