Question

Cost Behaviour Module Module Problem Due: September 23 at 11:55 p.m. ABC Firm reports the following for the first three months of 2020: January I February March Units Produced Units Sold 6,000 3,500 8,000 8,800 4,500 4,000 COGS Direct Materials Used Depreciation Shipping Cost Rent Utilities in Factory $37.700 19,500 7,500 4,900 3,125 16,500 $69,500 26,000 7,500 12,320 3,125 19,100 $40,700 14,625 7,500 5,600 3,125 14,550 1. For each cost, determine whether it is fixed, variable or mixed. You will have to think carefully about the appropriate level of activity for each cost: units sold or units produced 2. Prepare a cost function for each cost.

Answer 1

Direct Materials used Variable cost with respect to Number of units produced Dois. Depreciation Fixed cost in Shipping Cost = Variable cost with respect to Number of Units sold. iv Rent Fixed cost. - Utilities in Factory [ + Fixed Cost Mixed cost (variable Cost with respect to Number of Units produced). 2 Cost Function: Direct Materials used a $3-25 Number of units Produced Depreciation - $7,500 Shipping Cost $1.40 X Number of units sold Rent & 3,125 V. Utilities in Factory $ 8,700 +($1.30 * Number of units produced)

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