Bonita Company manufactures a single product. Annual production costs incurred in the manufacturing process are shown below for two levels of production.
| Costs Incurred |
| Production in Units |
5,000 |
10,000 |
| Production Costs |
Total Cost |
Cost/Unit |
Total Cost |
Cost/Unit |
| Direct materials |
$8,000 |
$1.60 |
$16,000 |
$1.60 |
| Direct labor |
9,500 |
1.90 |
19,000 |
1.90 |
| Utilities |
2,000 |
0.40 |
3,300 |
0.33 |
| Rent |
4,000 |
0.80 |
4,000 |
0.40 |
| Maintenance |
800 |
0.16 |
1,400 |
0.14 |
| Supervisory salaries |
1,000 |
0.20 |
1,000 |
0.10 |
(b) Classify each cost above as either variable, fixed, or mixed.
Exercise 19-3 The controller of Norton Industries has collected the following monthly expense data for use in analyzing the cost behavior of maintenance costs.
| Month |
Total
Maintenance Costs |
Total
Machine Hours |
| January |
$2,660 |
320 |
| February |
2,960 |
370 |
| March |
3,560 |
520 |
| April |
4,460 |
670 |
| May |
3,160 |
520 |
| June |
5,760 |
720 |
Determine the variable cost components using the high-low method. (Round variable cost to 3 decimal places e.g. 12.250.)
Determine the fixed components using the high-low method. (Round answer to 0 decimal places e.g. 2,520.)