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 1,900 units, and monthly production costs for the production of 1,500 units follow. Morning Doves utilities and maintenance costs are mixed with the fixed components shown in parentheses.

Production Costs	Total Cost
Direct materials	$ 2,100
Direct labor	7,900
Utilities ($130 fixed)	620
Supervisors salary	2,600
Maintenance ($310 fixed)	460
Depreciation	850

E5-4 (Algo) Determining Cost Behavior and Calculating Expected Cost [LO 5-1]

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).

Production Costs	Behavior	Rate
Direct materials	Variable	$2,100.00	per Unit		per Month
Direct labor	Variable	$7,500.00	per Unit		per Month
Utilities	Mixed		per Unit		per Month
Supervisors salary			per Unit		per Month
Maintenance			per Unit		per Month
Depreciation			per Unit		per Month

2. Determine the total fixed cost per month and the variable cost per unit for Morning Dove.

Total variable cost per unit
Total fixed cost per month

3. State Morning Doves linear cost equation for a production level of 0 to1,900 units. Enter answer as an equation in the form of y = a + bx.

Total cost =

+

x

4. Calculate Morning Doves expected total cost if production increased to 1,700 units per month. Enter answer as an equation in the form of y = a + bx.

a	+	b		x	=	y
						$0