Question
Morning Dove Company manufactures one model of birdbath, which is very popular. Morning Dove sells all units it produces each month. The relevant range is
Morning Dove Company manufactures one model of birdbath, which is very popular. Morning Dove sells all units it produces each month. The relevant range is 01,500 units, and monthly production costs for the production of 1,000 units follow. Morning Doves utilities and maintenance costs are mixed with the fixed components shown in parentheses.
Production Costs | Total Cost | |
Direct materials | $ | 1,900 |
Direct labor | 7,500 | |
Utilities ($120 fixed) | 580 | |
Supervisors salary | 3,300 | |
Maintenance ($290 fixed) | 500 | |
Depreciation | 800 | |
Required: 1. Identify each cost as variable, fixed, or mixed, and express each cost as a rate per month or per unit (or combination thereof). (Round your per unit value to 2 decimal places.)
2. Determine the total fixed cost per month and the variable cost per unit for Morning Dove. (Round your variable cost per unit to 2 decimal places.)
3. State Morning Doves linear cost equation for a production level of 01,500 units. Enter answer as an equation in the form of y = a + bx. (Round your variable cost per unit to 2 decimal places.)
4. Calculate Morning Doves expected total cost if production increased to 1,200 units per month. Enter answer as an equation in the form of y = a + bx. (Round Variable cost per unit to 2 decimal places.)
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