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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.

##### 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.

##### 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 ...

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