Q5. (20 minutes, 15 marks)

Sunshine Valley Meat Company produces one of the best sausage products in Ontario.The following information was obtained through an analysis of the accounting records:

Meat costs the company $3.25 per pound of sausage produced.

Compensation of production employees is $2.25 per pound of sausage produced.

Supervisory salaries total $23,000 per month.

The company incurs utility costs of $9,000 per month plus $0.35 per pound of sausage produced.

Insurance and property taxes average $6,400 per month.

REQUIRED:

1. Classify each cost as variable, fixed, or semi-variable.

1. create formula to express the behaviour of the firm's production costs.(Use the form Y = a + bX, where X denotes the quantity of sausage produced.)