Morning Dove Company manufactures one model of birdbath, which is very popular. Morning Dove sells all...
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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 0 to 1,500 units, and monthly production costs for the production of 500 units follow. Morning Dove's utilities and maintenance costs are mixed with the fixed components shown in parentheses. Production Costs Direct materials Direct labor Utilities ($100 fixed) Supervisor's salary Maintenance ($280 fixed) Depreciation Total Cost $1,500 7,500 650 3,000 480 800 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). State any assumptions you make. 2. Determine the total fixed cost per month and the variable cost per unit for Morning Dove. 3. State Morning Dove's linear cost equation for a production level of 0 to 1,500 units. 4. Calculate Morning Dove's expected total cost if production increased to 1,200 units per month. Mountain Dental Services is a specialized dental practice whose only service is filling cavities. Mountain has recorded the following for the past nine months: Month January February March April May June July August September Number of Cavities Filled Total Cost 625 $5,600 700 6,000 500 4,500 425 4,100 450 4,500 300 3,200 375 3,500 550 4,900 575 5,400 Required: 1. Use the high-low method to estimate total fixed cost and variable cost per cavity filled. 2. Using these estimates, calculate Mountain's total cost for filling 500 cavities. 3. How closely does your estimate match the actual cost for March? If they are different, explain why. 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 0 to 1,500 units, and monthly production costs for the production of 500 units follow. Morning Dove's utilities and maintenance costs are mixed with the fixed components shown in parentheses. Production Costs Direct materials Direct labor Utilities ($100 fixed) Supervisor's salary Maintenance ($280 fixed) Depreciation Total Cost $1,500 7,500 650 3,000 480 800 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). State any assumptions you make. 2. Determine the total fixed cost per month and the variable cost per unit for Morning Dove. 3. State Morning Dove's linear cost equation for a production level of 0 to 1,500 units. 4. Calculate Morning Dove's expected total cost if production increased to 1,200 units per month. Mountain Dental Services is a specialized dental practice whose only service is filling cavities. Mountain has recorded the following for the past nine months: Month January February March April May June July August September Number of Cavities Filled Total Cost 625 $5,600 700 6,000 500 4,500 425 4,100 450 4,500 300 3,200 375 3,500 550 4,900 575 5,400 Required: 1. Use the high-low method to estimate total fixed cost and variable cost per cavity filled. 2. Using these estimates, calculate Mountain's total cost for filling 500 cavities. 3. How closely does your estimate match the actual cost for March? If they are different, explain why.
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