IdentifyingCostBehavior.ZhangCorporationistryingtoidentifythecostbehaviorofthethreecostsshown.Costinformationisprovidedforsixmonths.

		Cost1	Cost2	Cost3
Month	UnitsProduced	TotalCosts	CostperUnit	TotalCosts	CostperUnit	TotalCosts	CostperUnit
1	18,000	$36,000	_____	$19,800	_____	$5,000	_____
2	16,000	32,000	_____	19,200	_____	5,000	_____
3	14,000	28,000	_____	18,200	_____	5,000	_____
4	12,000	24,000	_____	16,800	_____	5,000	_____
5	10,000	20,000	_____	14,500	_____	5,000	_____
6	8,000	16,000	_____	12,000	_____	5,000	_____

Required:

1. Calculatethecostperunit,andthenidentifyhowthecostbehaves(fixed,variable,ormixed)foreachofthethreecosts.Explainthereasoningbehindyouranswers.
2. Whyisitimportanttoidentifyhowcostsbehavewithchangesinactivity?

AccountAnalysis.BakerAdvertisingIncorporatedwouldliketoestimatecostsassociatedwithitsclientsonanannualbasis.Assumecostsforsuppliesandadvertisingstaffarevariablecosts.Theaccountingrecordsindicatethefollowingcostswereincurredlastyearfor100clients:

Supplies	$20,000
Advertisingstaffwages(hourlyemployees)	$170,000
Managersalary	$90,000
Buildingrent	$56,000

Required:

1. Useaccountanalysistoestimatetotalfixedcostsperyear,andthevariablecostperunit.StateyourresultsinthecostequationformY=f+vXbyfillinginthedollaramountsforfandv.
2. Estimatethetotalcostsforthiscomingyearassuming120clientswillbeserved.

27. ContributionMarginIncomeStatement.LastmonthKumarProductionCompanysolditsproductfor$60perunit.Fixedproductioncostswere$40,000,andvariableproductioncostsamountedto$15perunit.Fixedsellingandadministrativecoststotaled$26,000,andvariablesellingandadministrativecostsamountedto$5perunit.KumarProductionproducedandsold7,000unitslastmonth.

Required:

1. PrepareatraditionalincomestatementforKumarProductionCompany.
2. PrepareacontributionmarginincomestatementforKumarProductionCompany