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Question
Ross Company has the following information available regarding costs at various levels of monthly production:
Production volume 7,000 units 10,000 units
Direct materials $ 70,000 $100,000
Direct labor 56,000 80,000
Indirect materials 21,000 30,000
Supervisors' salaries 12,000 12,000
Depreciation on plant 10,000 10,000
Maintenance 32,000 44,000
Utilities 15,000 21,000
Insurance on plant and equipment 1,600 1,600
Property taxes on plant 2,000 2,000
Total $219,600 $300,600
A. Identify each cost as being variable, fixed, or mixed by writing the name of each cost under one of the following headings:
Variable Costs Fixed Costs Mixed Costs
B. Develop an equation for total monthly production costs.
C. Predict total costs for a monthly production volume of 8,000 units.
Answer
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