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Margo is the owner of a small retail business that sells gifts and home decorating accessories. Her business is well established. and she is now
Margo is the owner of a small retail business that sells gifts and home decorating accessories. Her business is well established. and she is now considering taking over additional retail space to expand her business to include gourmet foods and gift baskets. Based on customer feedback. she is condent that there is a demand for these items, but she is unsure how large that demand really is. Expanding her business this way will require that she incur not only new costs but also increases in existing costs. Margo has asked for your help in identifying the impact of her decision to expand in terms of her costs. When discussing these cost increases, be sure to specically identify those costs that are directly tied to her products and that would be considered overhead expenses. Sunset Cabinetry has collected cost infomiation from its production process and now wants to predict costs for various levels of activity. They plan to use the cost equation to formulate these predictions. Information gathered from August as follows: Cost Incurred Fixed and Variable Au 3 ust Cost Plant su-ervisor sale '12 000 er month Lumber direct materials '75 000 total Production worker wa es '111.00 er hour Machine Maintenance 5'.00 e unit roduced In August Sunset Cabinetry produced 1,000 units and used 2,000 hours of production labor. Using this information and the cost equation. predict Waymaker's total costs for the levels of production presented __ _l_ m_ A. Calculatezl Total Fixed Cost Direct Materials per unit Direct Labor per Hour Machine Maintenance
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