Module 14 AssignmentPart IClassify each of the following costs as variable, fixed, mixed, or step by writing an X under ...

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Module 14 Assignment-Classify each of the following costs as variable

April 14, 2018

Module 14 Assignment
Part I
Classify each of the following costs as variable, fixed, mixed, or step by writing an X under one of the
following headings (Sales volume is the cost driver).
Variable

Fixed

Mixed

Step

1. Total selling and administrative costs
2. Salaries of supervisors (each supervisor is in
charge of five employees)
3. Raw materials used in production
4. Power consumption in a restaurant
5. Cost of goods sold in a restaurant
6. Salaries of employees who handle 20 claims
per month
7. Pulpwood in a paper mill
8. Salaries of two secretaries in the corporate
office
9. Total current manufacturing costs
10. The cost of an automobile rented on the
basis of a daily charge plus $0.50 per mile
Part II
The Specialty Products Company needs to predict the labor cost in producing made-to-order mugs. The
following production information is available:
Year
2005
2006
2007
2008
2009
2010

Mugs Produced
2,300
3,200
2,200
4,200
3,000
2,600

Labor-Hours
1,700
1,950
1,600
2,300
1,900
1,750

Labor Cost
$10,800
$14,000
$15,100
$20,700
$19,400
$19,800

a. Select the appropriate independent variable for estimating labor cost. Explain the reason for your
selection.
b. Develop an equation for labor costs using the high-low method of cost estimation, and predict
total costs for an annual usage of 2,000 labor hours.










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