Sigma Manufacturing Co.

Scenario: Cost Structure Analysis

Cost Category	Fixed Cost ($)	Variable Cost per Unit ($)	Activity Level (Units)
Production Costs	150,000	10	20,000
Distribution Costs	80,000	5	25,000

Requirements:

1. Cost Behavior Analysis:
   • Classify each cost category (Production Costs and Distribution Costs) as fixed or variable based on the provided data.

1. Total Cost Calculation:
   • Calculate the total cost for Sigma Manufacturing Co. at the activity levels of 20,000 units and 25,000 units using marginal costing principles.

1. Contribution Margin Analysis:
   • Compute the contribution margin per unit and contribution margin ratio for Sigma Manufacturing Co. based on the provided cost structure.

1. Break-Even Analysis:
   • Perform a break-even analysis to determine the number of units and sales revenue needed for Sigma Manufacturing Co. to break even, considering marginal costing insights.

1. Sales Mix Optimization:
   • Recommend a sales mix that maximizes Sigma Manufacturing Co.'s overall contribution margin, incorporating marginal costing concepts.