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Ross Company has the following information available regarding costs at various levels of monthly production: Production volume 7,000 units 10,000 units Direct materials $ 70,000
Ross Company has the following information available regarding costs at various levels of monthly production: Production volume 7,000 units 10,000 units Direct materials $ 70,000 $100,000 Direct labor 56,000 80,000 Indirect materials 21,000 30,000 Supervisors' salaries 12,000 12,000 Depreciation on plant 10,000 10,000 Maintenance 32,000 44,000 Utilities 15,000 21,000 Insurance on plant and equipment 1,600 1,600 Property taxes on plant 2,000 2,000 Total $219,600 $300,600 Required: A. Classify each cost as fixed, variable, or mixed or none of these from the dropdown list. Direct materials Direct labor Indirect materials Supervisors' salaries Depreciation on plant Maintenance Utilities Insurance on plant and equipment Property taxes on plant B. Develop an equation for total monthly production costs. Total monthly production costs Fixed costs + Variable costs $ + ($ per unit X number of units) c. Predict total costs for a monthly production volume of 8,000 units
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