Letitia Corp. manufactures kitchen timers. The company incurred the following costs to produce 25,000 timers in May 2009:
- Timer mechanisms – $11,250
- Resin bases – $8,750
- Direct labor – $9,000
- Machinery depreciation (calculated on straight-line basis) – $3,750
- Supervisory salaries – $6,000
- Utilities – $2,000
- Total – $40,750
- Considering behavior in relationship to activity changes; how would each of these costs be classified?
- What did each timer cost?
- If Letitia Corp. increases production in June 2009 to 30,000 units, what will be the total cost of each cost component? If you cannot determine the total cost of a component, discuss the reason.
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