Q1: Modelling Cost Behaviour and Budgets Delicious Cupcakes is an Auckland cupcake company that makes and sells cupcakes to consumers Delicious Cupcakes plans to make 60,000 cupcakes topped with flavoursome icing to sell for $5.50 each in the coming year. There are some basic ingredients that are directly associated in making all the cupcakes (i.e. flour, sugar, butter, and eggs) and the icing toppings (i.e. icing sugar). The cupcakes are always baked in batches of 100 cupcakes. After baking, the cupcakes will need some time to cool and rest before icing can be added. Bakers prepare, bake and decorate the cupcakes. There are additional overhead costs in addition to the baking process. When making 50,000 cupcakes last year, the following overhead costs were incurred Overhead Costs Total Description Bakery supervisor $ 59,000 Two bakery supervisors are employed to take turns to supervise and train the bakers. This amount relates only to their supervision Dry ingredients $13,850 Depending on recipes, there may be additional dry ingredients such as chocolate, cocoa powder, spices, baking powder, baking soda etc added Wet ingredients $17,100 Depending on recipes, there may be additional wet ingredients such as milk, raspberry, mint, vanilla essence orange rinds, orange juice etc added Utilities Rent Depreciation $ 9,800 | Relates to heat, electricity and water, of which 40% is fixed $ 53,700 Annual rent of all premises. $ 4,750 Depreciation in relation to baking equipment, office equipment and delivery vehicles Total Overhead Cost158,200