Chapter 2, Problem 2.23E

1.

To determine

Fixed Cost:

Fixed cost refers the cost which remains constant for particular time duration and there is no effect over it of the level of production.

Variable Cost:

Variable cost refers the cost which varies due to the change in the level of production. Higher production level refers higher the variable cost, and lower production level refers lower the variable cost.

Relevant Range:

Relevant range refers to the level of the activity which represents the maximum and minimum limits of cost driver at various levels of cost.

To identify: The current annual relevant range of output.

2.

To determine

To identify: The current annual variable and fixed manufacturing costs within the relevant range.

3.

To determine

To identify: The relevant range of output and total fixed and variable manufacturing cost next year.