Question

Required information 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 0-1,800 units, and monthly production costs for the production of 1,500 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 ($150 fixed) Supervisor's salary Maintenance ($320 fixed) Depreciation Total Cost $2,100 7,100 620 3,100 490 750 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). 2. Determine the total fixed cost per month and the variable cost per unit for Morning Dove. 3. State Morning Dove's linear cost equation for a production level of 0-1,800 units. Enter answer as an equation in the form of y = a + bx. 4. Calculate Morning Dove's expected total cost if production increased to 1,700 units per month. Enter answer as an equation in the form of y = a + bx Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 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.)

Answer 1

Answer

• Requirements asked

[1]

	Behavior	Rate
Direct materials	Variable	$1.40	per unit		per month
Direct Labor	Variable	$4.73	per unit		per month
Utilities	Mixed	$0.31	per unit	$150	per month
Supervisor's Salary	Fixed		per unit	$3,100	per month
Maintenance	Mixed	$0.11	per unit	$320	per month
Depreciation	Fixed		per unit	$750	per month

	Behavior	Rate
Direct materials	Variable	=+(1.4)	per unit		per month
Direct Labor	Variable	=+(4.73333333333333)	per unit		per month
Utilities	Mixed	=+(620-150)/1500	per unit	150	per month
Supervisor's Salary	Fixed		per unit	3100	per month
Maintenance	Mixed	=+(490-320)/1500	per unit	320	per month
Depreciation	Fixed		per unit	750	per month

[2]

Total Variable cost per unit	$6.55	=1.4+4.73+0.31+0.11
Total Fixed Cost per month	$4,320	=150+3100+320+750

[3]

Total Cost =

$4,320

+

$6.55

x

[4]

a	+	b	x	X	=	Y
$4,320	+	$6.55	x	1700	=	$15,455