Question:
Malley Company produces baseball caps. The company incurredthe following costs to produce 2,000 caps last month:
|
Cardboard for the bills
|
$1,200
|
|
Cloth materials
|
2,000
|
|
Plastic for headband straps
|
1,500
|
|
Straight-line depreciation
|
1,800
|
|
Supervisors' salaries
|
4,800
|
|
Utilities
|
900
|
|
Total
|
$12,200
|
a. What did each cap component cost on a per-unit basis?
b. What is the probable type of behavior that each of the costs exhibits?
c. The company expects to produce 2,500 caps this month. Would you expect each type of cost to increase or decrease? Why? Why can't the total cost of 2,500 caps be determined?