Problem
Sandburg Manufacturing manufactures a single product. Annual production costs incurred in the manufacturing process are shown below for the production of 2,000 units. The Utilities and Maintenance are mixed costs. The fixed portions of these costs are $300 and $200, respectively.
Calculate the expected costs to be incurred when production is 4,000 units. Use your knowledge of cost behavior to determine which of the other costs are fixed or variable.
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Costs Incurred
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Production in Units
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2,000
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4,000
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Type of cost
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Production Costs
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a.
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Direct Materials
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$ 6,000
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$
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MixedVariableFixed
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b.
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Direct Labor
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16,000
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FixedVariableMixed
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c.
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Utilities
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1,000
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MixedFixedVariable
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d.
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Rent
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3,000
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MixedFixedVariable
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e.
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Indirect Labor
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4,200
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FixedVariableMixed
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f.
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Supervisory Salaries
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1,500
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MixedFixedVariable
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g.
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Maintenance
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1,000
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VariableFixedMixed
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h.
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Depreciation
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2,500
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FixedMixedVariable
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