Question
Nelson Automobile has collected cost information from its production process and now wants to predict costs for various levels of activity. They plan to use
Nelson Automobile has collected cost information from its production process and now wants to predict costs for various levels of activity. They plan to use the cost equation (Y = a+bX ) to formulate these predictions. Relevant Range is 1,000 unit to 2,000 unit.In January, Jesson produced 1,000 units and used 2,000 hours of production labor. January Cost Information for Nelson Automobile: Cost Incurred Fixed or Variable Cost Plant supervisor salary Fixed $12,000 per month Steel (direct materials) Variable $75,000 total Production worker wages Variable $11.00 per hour Machine maintenance Variable $5.00 per unit produced Rent on factory Fixed $15,000 per month REQUIREMENTS: a) Using this information and the cost equation, predict Nelson s total costs for the levels of production given below: Month Activity Level February 1,500 units b) Calculate Average total cost for the month of February. 2. Following is the given information for XYZ company for the month of December: Factory utilities $ 15,600 Direct labor $89,100 Depreciation on factory equipment 12,650 Sales salaries 46,400Property taxes on factory building 2,500 Depreciation on delivery trucks 8,800 Indirect factory labor 48,900 Repairs to office equipment 2,300 Indirect materials 80,800 Factory repairs 2,000 Direct materials used 137,600 Advertising 18,000 Factory managers salary 13,000 Office supplies used 5,640 From the information, determine the total amount of: (a) Manufacturing overhead. (b) Product costs (c) Period costs.
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