Required information 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 0–1,600 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 $ 1,500 Direct labor 8,100 Utilities ($100 fixed) 560 Supervisor’s salary 2,900 Maintenance ($350 fixed) 500 Depreciation 750 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 0–1,600 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

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter11: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 11.2.4P

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Required information

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 0–1,600 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	$	1,500
Direct labor		8,100
Utilities ($100 fixed)		560
Supervisor’s salary		2,900
Maintenance ($350 fixed)		500
Depreciation		750

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 0–1,600 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

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