Question

E5-2 Determining Cost Behavior and Calculating Expected Cost [LO 5-1] Morning Dove Company manufactures one model of birdbath, which is very popular. Morning Dove sells all units it produces each month. The relevant range is 0-1,600 units, and monthly production costs for the production of 1,200 units follow. Morning Dove's utilities and maintenance costs are mixed with the fixed components shown in parentheses. Production Costs Direct materials Direct labor Utilities ($140 fixed) Supervisor's salary Maintenance ($340 fixed) Depreciation Total Cost $ 2,500 7,100 560 2,500 480 800 Required: 1. Identify each cost as variable, fixed, or mixed, and express each cost as a rate per month or per unit (or combination thereof). (Round your per unit value to 2 decimal places.) Behavior Production Costs Direct Materials Direct labori Utilities Rate per Unit per Unit per Unit per Unit per Unit per Unit per Month per Month per Month per Month per Month per Month Supervisor's Salary Maintenance Depreciation

Answer 1

1		Rate
Direct Materials	Variable	2.08	per unit	2500/1200	-	per month
Direct Labor	Variable	5.92	per unit	7100/1200	-	per month
Utilities	Mixed cost	0.35	per unit	140 fixed (560-140)/1200	140	per month
Supervisor?s Salary	Fixed	-	per unit	2500	2500	per month
Maintenance	Mixed cost	0.12	per unit	340 Fixed (480-340)/1200	340	per month
Depreciation	Fixed cost	-	per unit	800	800	per month

2
Total Fixed cost = 140+2500+340+800	3780
Total Variable cost (2.08+5.92+0.35+.12)	8.47

3

Y = 3780+8.47 X

4

Total expected cost of production for 1,400 unit

3780+(8.47*1400)

15638