Mozena Corporation manufactures a single product. Monthly production costs incur

Question

Mozena Corporation manufactures a single product. Monthly production costs incurred in the manufacturing process are shown below for the production of 3,000 units. The utilities and maintenance costs are mixed costs. The fixed portions of these costs are $300 and $200, respectively.

Production in Units

3,000


Production Costs


Direct Materials $7,500
Direct labor 15,000
Utilities 1,800
Property taxes 1,000
Indirect labor (Fixed cost) 4,500
Supervisory salaries 1,800
Maintenance 1,100
Depreciation 2,400


Calculate the expected costs when production is 5,000 units.
$

Explanation / Answer

$54,500 variable utilities = 1800 - 300 = 1500 variable maintenance = 1100 - 200 = 900 Total fixed costs = 300 + 200 + 1000 + 4500 = 6000 total variable costs = 7500 + 15000 + 1500 + 1800 + 900 + 2400 = 29100 / 3000 units = $9.7 per unit * 5000 units = 48,500 Total expected costs = 48,500 + 6,000 = 54,500

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