Question 4: Cost structure estimation

Cost account	Amount	Fixed or variable?
direct labor	$6,000	F V
direct materials	$6,000	F V
depreciation	$8,000	F V
rent	$10,000	F V
administrative staff salaries	$7,000	F V

Production volume was 200 units. a) Which cost structure estimation method should we use?

account classification methodhigh-low method

b) Classify each cost account above as fixed or variable. Enter your answers in the table above. c) Estimate the cost structure parameters: total FC=$ unit VC=$ Write down the total cost equation: TC = + * volume (e.g., if TC=500+2*volume, enter 500 in the first box and 2 in the second box) d) Predict the total cost of producing 250 units: