Classify each cost element as either fixed, variable or mixedCalculate:the variable production cost per unit and the total fixed production overheadCalculate the total variable cost per unit and the total fixed costs Buggs-Off Corporation produces and sells a line of mosquito repellants that are sold usually all year round.The product sells at $100 per box. The following cost data has been prepared for its estimated upper and lowerlimits of activity for the year ended December 31, 2020.Lower Limit Upper LimitProduction (# of boxes)4,0006,000Production Costs:Direct Materials$60,000$90,000Direct Labour....80,000120,000Overhead:Indirect Materials.....25,00037,500Indirect Labour40,00050,000Depreciation20,00020,000Selling & Administrative Expenses:Sales Salaries50,00065,000Office Salaries30,00030,000Advertising45,00045,000Other15.00020.000Total$365.000$477.500Required:

Using high low method, variable cost per unit is calculated as follows: Variable cost per unit=…

Classify each cost element as either fixed, variable or mixed Calculate: the variable production cost per unit and the total fixed production overhead Calculate the total variable cost per unit and the total fixed costs

Classify each cost element as either fixed, variable or mixed Calculate: the variable production cost per unit and the total fixed production overhead Calculate the total variable cost per unit and the total fixed costs

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.

Question

Classify each cost element as either fixed, variable or mixed

Calculate:

the variable production cost per unit and the total fixed production overhead

Calculate

the total variable cost per unit and the total fixed costs

Buggs-Off Corporation produces and sells a line of mosquito repellants that are sold usually all year round.
The product sells at $100 per box. The following cost data has been prepared for its estimated upper and lower
limits of activity for the year ended December 31, 2020.
Lower Limit Upper Limit
Production (# of boxes)
4,000
6,000
Production Costs:
Direct Materials
$60,000
$90,000
Direct Labour....
80,000
120,000
Overhead:
Indirect Materials.....
25,000
37,500
Indirect Labour
40,000
50,000
Depreciation
20,000
20,000
Selling & Administrative Expenses:
Sales Salaries
50,000
65,000
Office Salaries
30,000
30,000
Advertising
45,000
45,000
Other
15.000
20.000
Total
$365.000
$477.500
Required:

Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.

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