Cost Behaviour:
The cost behavior can be defined as the sensitivity of cost to changes in production level or the volume level changes. Some cost changes directly with the changes in the level of production, some cost do not change at all and some costs remain same within a relevant range and changes when the level of production moves out of relevant range.
Variable costs: The costs which change directly with the variations in the level of production are termed as variable costs.
Fixed costs: The costs which remain same even after variations in the level of output are termed as fixed costs.
Mixed costs: The mixed cost can be defined as the cost which has the element of both the variable cost and the fixed cost.
The total mixed cost is calculated as −
To compute: Total costs to be incurred for a week with 2,750 units of activity

Answer to Problem 12.1ME
Total costs to be incurred for a week with 2,750 units of activity = $ 115,000
Explanation of Solution
The above answer can be explained as −
Given,
- Fixed costs −
- Supervisor's salary = $ 1,000
- Factory Rent = $ 2,500
- Mixed costs −
- Utilities = $ 1,500 + $ 5.25 per unit
- Variable cost per unit −
- Manufacturing labor wages = $ 20
- Supplies used in production = $ 8.50
- Packaging cost = $ 2.25
- Warranty cost = $ 4
The total fixed cost is −
Total variable cost will be calculated as −
Now, total variable cost will be −
Now, total cost will be calculated as −
Thus, the total costs to be incurred for a week with 2,750 units of activity has been computed.
Want to see more full solutions like this?
Chapter 12 Solutions
Accounting: What the Numbers Mean
- On January 1, 2023, Everest Textiles acquired a patent for $300,000 giving it the right to manufacture a new eco-friendly fiber. The patent had a remaining legal life of 14 years, but Everest expects to use it for 7 years. Additionally, Everest purchased machinery for $120,000 to process the fiber. The machinery has a physical life of 10 years, but Everest will use it only for 7 years, at which point it expects to sell it for $30,000. The company applies straight-line amortization and depreciation. What is the total amount to expense in 2026 related to the patent and machinery?arrow_forwardFinancial accountingarrow_forwardCrystal Bay Hospital's central supply tracks sterile items using a batch code system. When opening count shows 240 items, used items logged as 185, damaged items recorded as 15, but closing count reveals 25 items, what is the unaccounted variance?arrow_forward
- Rolex Industries uses a predetermined overhead rate based on direct labor hours. The company applies overhead at a rate of $9 per direct labor hour, which consists of a variable overhead rate of $5 per direct labor hour and a fixed overhead rate of $4 per direct labor hour. The budgeted fixed overhead costs for the period total $60,000. Using the budgeted direct labor hours, calculate the total budgeted overhead for the period.arrow_forwardDior Enterprises has a beginning equity of $315,000, net income of $64,000, dividends of $50,000, and investments by owners in exchange for stock of $10,000. What is the ending equity? A. $339,000 B. $352,000 C. $275,000 D. $329,000arrow_forwardWhat is your estimate of an appropriate stock price ?arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education





