Question

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	Total Cost
Direct materials	$	2,700
Direct labor		7,300
Utilities ($120 fixed)		630
Supervisor’s salary		2,800
Maintenance ($280 fixed)		480
Depreciation		750

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 0–1,600 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 1,400 units per month. Enter answer as an equation in the form of y = a + bx.

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.)

Production Costs	Behavior	Rate
Direct Materials			per Unit		per Month
Direct labor			per Unit		per Month
Utilities			per Unit		per Month
Supervisor’s Salary			per Unit		per Month
Maintenance			per Unit		per Month
Depreciation			per Unit		per Month

2.

Determine the total fixed cost per month and the variable cost per unit for Morning Dove. (Round your intermediate calculations and variable cost per unit to 2 decimal places.)

Total Variable Cost per Unit
Total Fixed Cost per Month

3.

State Morning Dove’s linear cost equation for a production level of 0–1,600 units. Enter answer as an equation in the form of y = a + bx. (Round your intermediate calculations and variable cost per unit to 2 decimal places.)

Total Cost

=

+

x

4.

Calculate Morning Dove’s expected total cost if production increased to 1,400 units per month. Enter answer as an equation in the form of y = a + bx. (Round intermediate calculations and variable cost per unit to 2 decimal places.)

+

*

=

a b x y   

Answer 1