Freedom Mailbox

produces decorative mailboxes. When it produces

1,000

mailboxes, the company's average cost per unit is

$29.50.

a.	What is the total cost of producing 1,000 mailboxes?
b.	If $21,000 of the total costs are fixed, what is the variable cost of producing each mailbox?
c.	Write Freedom Mailbox's cost equation.
d.	If the plant manager uses the average cost per unit to predict total costs, what would the forecast be for 1,500 mailboxes?
e.	If the plant manager uses the cost equation to predict total costs, what would the forecast be for 1,500 mailboxes?
f.	What is the dollar difference between your answers to questions d and e? Which approach to forecasting costs is appropriate? Why?

Freedom Mailbox produces decorative mailboxes. When it produces 1,000 mailboxes, the company's average cost per unit is $29.50. a. What is the total cost of producing 1,000 mailboxes? b. If $21,000 of the total costs are fixed, what is the variable cost of producing each mailbox? c. Write Freedom Mailbox's cost equation. d. If the plant manager uses the average cost per unit to predict total costs, what would the forecast be for 1,500 mailboxes? e. If the plant manager uses the cost equation to predict total costs, what would the forecast be for 1,500 mailboxes? f. What is the dollar difference between your answers to questions d and e? Which approach to forecasting costs is appropriate? Why? a. What is the total cost of producing 1,000 mailboxes? (Round your answer to the nearest whole dollar.) The total cost of producing 1,000 mailboxes is $ 29,500 b. If $21,000 of the total costs are fixed, what is the variable cost of producing each mailbox? (Round your answer to the nearest cent.) The variable cost per unit is $- c. Write Freedom Mailbox's cost equation. y=$x+ d. If the plant manager uses the average cost per unit to predict total costs, what would the forecast be for 1,500 mailboxes? (Round your answer to the nearest whole dollar.) The total cost is $ e. If the plant manager uses the cost equation to predict total costs, what would the forecast be for 1,500 mailboxes? (Round your answer to the nearest whole dollar.) The total cost is $) f. What is the dollar difference between your answers to questions dande? Which approach to forecasting costs is appropriate? Why? (Round your answer to the nearest whole dollar.) The plant manager's forecast would be $ too high if he uses the to predict costs. The is based on a mixed cost that will change as volume changes. If the manager uses this method, he is erroneously assuming that the does not change at different volumes. The manager should use the to predict costs since it correctly takes into account the variable and fixed components of producing mailboxes