Question

E5-4 and E5-5 [LO 5-1, 5-5) 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 0-1900 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 ($100 fixed) Supervisor's salary Maintenance ($310 fixed) Depreciation Total Cost $3,100 7.700 630 3,300 520 850 E5-4 (Algo) Determining Cost Behavior and Calculating Expected Cost [LO 5-1) 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 0-1,900 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

Part 1
	Cost details	Behaviour	Rate
	Direct Material	Variable	$2.07 per unit
	Direct Labor	Variable	$5.13 per unit
	Utilities	Mixed	$0.35 per unit	$100 per month
	Supervisor's Salary	Fixed		$3,300 per month
	Maintainance	Mixed	$0.14 per unit	$310 per month
	Depreciation	Fixed		$850 per month
Part 2
	Total Variable Cost per unit		$7.69 per unit
	Total Fixed Cost per month			$4,560 per month
Part 3	Total Cost(Y) =$4,560 + $7.69X
Part 4	Total Cost at 1,700 units =$4,560 + $7.69 * 1,700 =$17,633
	Here,
	a =$4,560
	b =$7.69
	x =1,700 units
	y =$17,633