Question

Maibox Magic produces decorative maiboxes. The company's average cost per unit is $26.43 when it produces 1.600 mailboxes Requirements 1. What is the total cost of producing 1600 mailboxes? 2 $21.488 of the total costs are fixed, what is the variable cost of producing each mailbox? 3. Write Mailbox Magic's cost equation 4. If the plant manager uses the average cost per unit to predict total costs, what would the forecast be for 1.800 mailboxes? 5. If the plant manager uses the cost equation to predict total costs, what would the forecast be for 1,800 mailboxes? 6. What is the dollar difference between your answers to questions 4 and 52 Which approach to forecasting costs is appropriate? W The total cost is $ 47,574 Requirement 6. If the plant manager uses the cost equation to predict total costs, what would the forecast be for 1,800 mailboxes? The total cost is $ 44,888 Requirement 6. What is the dollar difference between your answers to Questions 4 and 5? Which approach to forecasting costs is appropriate? Why? The plant manager's forecast would be s The method, he/she is erroneously assuming that the too high if he/she uses the to predict costs is based on a mixed cost that will change as volume changes. If the manager uses this does not change at different volumes. The to predict costs since it correctly takes into account the variable and manager should use the fixed components of producing mailboxes Choose from any list or enter any number in the input fields and then click Check Answer. All parts showing Clear All Check Answer

Answer 1

- average cost assumes that both fixed Ee variable costs changes with the change in volume cost sacuation is a linear earuation that takes into consideration total fixed costs, the fixed component of mixed cost, es variable cost pes unit. mixed cost saluation = at bx a fixed cost (total) b= variable cost per unit ez number of units average cost method = $47574 cost Eacuation $ 44888 2686 difference Answer- The plant manger for cast would be $2666 too high if he/she uses the average cost per unit to predict total costs. The average cost per unit is based on mixed cost that will change at different volumes. The manages should If the manager uses this me that, hel she is essioneously assurning that the fixed cost does not change at different volume. The manager should use the Gost eacuation to predict costs since it correctly takes into account the variable & fixed component mail boxes, of producing