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 0-1,700 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 ($100 fixed) Supervisor's salary Maintenance ($330 fixed) Depreciation Total Cost $3,100 7,500 600 2,500 510 750 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 0-1,700 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. Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 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

Answer 1

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Morning Dove Company
Answer 1
	Amount	Variable cost per unit	Fixed Cost	Nature	Remarks
Units	1,200.00
Direct Materials	3,100.00	2.58		Variable cost	Direct Material is always a variable cost. Cost per unit is calculated as $ 3,100 divided by 1,200 units.
Direct Labor	7,500.00	6.25		Variable cost	Direct Labor is always a variable cost. Cost per unit is calculated as $ 7,500 divided by 1,200 units.
Utilities	500.00	0.42	100.00	Mixed Cost	It is mentioned that $ 100 is fixed out of $ 600. So $ 500 is a variable cost. Cost per unit is calculated as $ 500 divided by 1,200. units.
Supervisor salary	2,500.00		2,500.00	Fixed Cost	Supervisor salary is a fixed cost.
Maintenance	180.00	0.15	330.00	Mixed Cost	It is mentioned that $ 330 is fixed out of $ 510. So $ 180 is a variable cost. Cost per unit is calculated as $ 180 divided by 1,200. units.
Depreciation	750.00		750.00	Fixed Cost	Depreciation is a fixed cost.
Total		9.40	3,680.00
Answer 2
Variable cost per unit	$               9.40
Fixed Cost	$       3,680.00
Answer 3
Cost equation:	y= $ 3,680+ $9.40x
Answer 4
Cost equation:	y= $ 3,680+ $9.40x
y=	$ 3,680 + $ 9.40*1400
y=	$     16,840.00
So total cost of production of 1,400 units is $ 16,840.