Question

Mozena Corporation manufactures a single product. Monthly production costs incurred in the manufacturing process are shown below for the production of 3,500 units. The utilities and maintenance costs are mixed costs. The fixed portions of these costs are $460 and $380, respectively.

Production in Units		3,500
Production Costs
Direct materials		$7,840
Direct labour		15,435
Utilities		1,790
Property taxes		1,030
Indirect labour		4,620
Supervisory salaries		2,100
Maintenance		1,290
Depreciation		2,450

Identify the costs as variable, fixed, or mixed.

Cost
Direct materials		MixedVariableFixed
Direct labour		VariableFixedMixed
Utilities		FixedMixedVariable
Property taxes		MixedVariableFixed
Indirect labour		MixedVariableFixed
Supervisory salaries		MixedFixedVariable
Maintenance		FixedVariableMixed
Depreciation		VariableMixedFixed

Calculate the expected costs when production is 5,100 units. (Round per unit calculations to 2 decimal places, e.g. 15.26 and final answer to the nearest whole dollar, e.g. 5,275.)

Cost to produce 5,100 units

$

Answer 1

1	Cost	Nature
	Direct Materials	Variable
	Direct Labour	Variable
	Utilities	Mixed
	Property Taxes	Fixed
	Indirect Labour	Fixed	(In direct labour may either be variable or fixed, here it Is assumed to be fixed)
	Supervisory Salaries	Fixed
	Maintenance	Mixed
	Depreciation	Fixed
2	Variable cost per unit (exclude for utilities and maintenance)	6.65	(7840+15435)/3500
	Variable cost per unit for utilities	0.38	(1790-460)/3500
	Variable cost per unit for maintenance	0.26	(1290-380)/3500
3	Calculation of expected cost when production is 5100 Units
	Variable cost of Direct labour and direct material	33915.0	(5100*6.65)
	Variable cost for utilities	1938.0	(5100*.38)
	Variable cost for maintenance	1326.0	(5100*.26)
	Fixed portion of utilities	460
	Fixed portion of maintenance	380
	Property Taxes	1030
	Indirect Labour	4620
	Supervisory Salaries	2100
	Depreciation	2450
	Total expected cost when production of 5605 Units	48219.0