Reference no: EM132970857

The controller for Camden's Bike Shop has gathered the following cost and activity level information:

Average total cost per unit $225.00

Production level used to calculate average cost 1,000

Total fixed costs $80,000

Question 1: What is the total cost of producing 1,000 racing bicycles?

Question 2: What is the variable cost of producing each racing bicycle?

Question 3: Suppose the controller uses the average cost to predict total costs. What total cost would the controller calculate for 2,500 racing bicycles?

Question 4: If the controller uses the cost equation to predict total costs, what total cost would the controller calculate for 2,500 racing bicycles?

Question 5: Is there a difference between the forecasted total cost using average cost versus the cost equation? If there is a difference, what creates the difference? If there is no difference, when would there be a difference?