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Question - PCB Corporation manufactures a single product. Monthly production costs incurred in the manufacturing process are shown below for the production of 3,000 units.
Direct materials $7,500
Direct labor 18,000
Utilities 2,100
Property taxes 1,000
Indirect labor 4,500
Supervisory salaries 1,900
Maintenance 1,100
Depreciation 2,400
The utilities and maintenance costs are mixed costs. The fixed portions of these costs are $300 and $200, respectively.
Instructions -
1. Identify the above costs as variable, fixed, or mixed.
2. Calculate the expected costs when production is 5,000 units. Explain assumptions underlying CVP analysis.
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