Churchill Company Has the Following Information Available Regarding Costs at Various

Essay

Churchill Company has the following information available regarding costs at various levels of monthly production: $\begin{array}{lrr}\text { Production volume } & 7,000 & 10,000 \\\text { Direct materials } & \$ 70,000 & \$ 100,000 \\\text { Direct labour } & 56,000 & 80,000 \\\text { Indirect materials } & 21,000 & 30,000\\\text { Supervisors' salaries } & 12,000 & 12,000 \\\text { Depreciation on plant } & 10,000 & 10,000 \\\text { Maintenance } & 32,000 & 44,000 \\\text { Utilities } & 15,000 & 21,000\\\text { Insurance on plant and equipment } & 1,600 & 1,600 \\\text { Property taxes on plant } & 2,000 & 2,000 \\\text { Total } & \$ 219,600 & \$ 300,600 \\\end{array}$ Required: A. Identify each cost as being variable, fixed, or mixed by writing the name of each cost under one of the following headings:
$\text { Variable Costs } \quad \text { Fixed Costs } \quad \text { Mized Costs }$
B. Develop an equation for total monthly production costs.
C. Predict total costs for a monthly production volume of 8,000 units.