Problem 1. Monthly production costs in Pesavento Company for two levels of production are as follows.
Cost 2,000 Units 4,000 Units
Indirect Labor $10,000 $20,000
Supervisory Salaries 5,000 5,000
Maintenance 4,000 7,000
Please indicate which costs are variable, fixed, and mixed, and why.
Problem 2. For Lodes Company, the relevant range of production is 40-80% of capacity. At 40% of capacity, a variable cost is $4,000 and a fixed cost is $6,000. Please diagram the behavior of each cost within the relevant range assuming the behavior is linear.
Problem 3. For Hunt Company, a mixed cost is $15,000 plus $18 per direct labor hour. Please Diagram the behavior of the cost using increments of 500 hours up to 2,500 hours on the horizontal axis and increments of $15,000 up to $60,000 on the vertical axis.