Part 1: Hernandez Systems began business on January 1 of the current year, producing a single product that is popular with home builders. Demand was very strong, allowing the company to sell its entire manufacturing output of 80,000 units. The following unit costs were incurred: Manufacturing costs: Direct materials Direct labor Variable overhead Fixed overhead Selling and administrative costs: Variable Fixed $15 8 11 6 5 2 Hernandez anticipates an increase in productive output to 100,000 units and sales of 95,000 units in the next accounting period. The company uses appropriate drivers to determine cost behavior and estimates. Required: A. Assuming that present cost behavior patterns continue, compute the total expected costs in the upcoming accounting period. B. Jan Compton is about to prepare a graph that shows the unit cost behavior for variable selling and administrative cost. If the graph's horizontal axis is volume and the vertical axis is dollars, briefly describe what Compton's graph should look like. C. Determine whether the following costs are variable or fixed in terms of behavior: 1. Yearly lease payments for a state-of-the-art cutting machine. 2. A fee paid to a consultant who provided advice about quality issues. The fee was based on the number of consulting hours provided. 3. Cost of an awards dinner for "star" salespeople. Sebastian Muffler, Inc. operates an automobile service facility. The table below shows the cost incurred during a month when 500 mufflers were replaced. Number of Muffler Replacements 400 500 600 Total costs: Fixed costs Variable costs Total costs B E $9,000 6.000 $15.000 D F 1 Cost per muffler replacement: Fixed cost Variable cost Total cost per muffler replacement G J M H K N L O Required: Fill in the missing amounts, labeled A through O, the table above. Part 3: The following terms are used to describe various economic characteristics of costs: Opportunity cost Out-of-pocket cost Sunk cost Differential cost Marginal cost Average cost Required: Choose one of the preceding terms to characterize each of the amounts described below. Each term may be used only once. A. The cost of including one extra child in a day-care center. B. The cost of merchandise inventory purchased five years ago. The goods are now obsolete. C. The cost of feeding 300 children in a public school cafeteria is $450 per day, or $1.50 per child per day. What economic term describes this $1.50 cost? D. The management of a high-rise office building uses 3,000 square feet of space in the building for its own administrative functions. This space could be rented for $30,000. What economic term des this $30,000 of lost rental revenue? E. The cost of building an automated assembly line in a factory is $700,000; a manually operated assembly line would cost $250,000. What economic term is used to describe the $450,000 variation between these two amounts? F. Refer to the preceding question and assume that the firm is currently building the assembly line for $700,000. What economic term is used to describe the $700,000 construction cost