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    Monthly production costs in Pesavento Company for two levels

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    1. Monthly production costs in Pesavento Company for two levels of production are as follows.

    Cost 2,000 Units 4,000 Units

    Indirect Labor $10,000 $20,000
    Supervisory Salaries 5,000 5,000
    Maintenance 4,000 7,000

    Please indicate which costs are variable, fixed, and mixed, and why.

    2. For Lodes Company, the relevant range of production is 40-80% of capacity. At 40% of capacity, a variable cost is $4,000 and a fixed cost is $6,000. Please diagram the behavior of each cost within the relevant range assuming the behavior is linear.

    3. For Hunt Company, a mixed cost is $15,000 plus $18 per direct labor hour. Please Diagram the behavior of the cost using increments of 500 hours up to 2,500 hours on the horizontal axis and increments of $15,000 up to $60,000 on the vertical axis.

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    Solution Preview

    1. Monthly production costs in Pesavento Company for two levels of production are as follows.

    Cost 2,000 Units 4,000 Units

    Indirect Labor $10,000 $20,000
    Supervisory Salaries ...

    Solution Summary

    1. Monthly production costs in Pesavento Company for two levels of production are as follows.

    Cost 2,000 Units 4,000 Units

    Indirect Labor $10,000 $20,000
    Supervisory Salaries 5,000 5,000
    Maintenance 4,000 7,000

    Please indicate which costs are variable, fixed, and mixed, and why.

    2. For Lodes Company, the relevant range of production is 40-80% of capacity. At 40% of capacity, a variable cost is $4,000 and a fixed cost is $6,000. Please diagram the behavior of each cost within the relevant range assuming the behavior is linear.

    3. For Hunt Company, a mixed cost is $15,000 plus $18 per direct labor hour. Please Diagram the behavior of the cost using increments of 500 hours up to 2,500 hours on the horizontal axis and increments of $15,000 up to $60,000 on the vertical axis.

    $2.19

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