Exercise #2Monokubs produces frozen gourmet vegetarian pizzas. The following information is available:Electricity bills show electricity costs of $3,000 per month plus an average of $0.02 per pizza.Payroll records show that supervisory salaries total $8,000 per month.Wage records show that wages and on-costs for production employees are $0.05 per pizza.Inspection of several invoices from ingredient suppliers indicate that the ingredients per pizza cost on average $1.90.Depreciation schedules show that the monthly depreciation on factory building and equipment is $21,000. Required:Classify the costs in terms of variable, semi-variable and fixed costs, and form a cost function used to calculate monthly production cost.Assume that 7,500 pizzas will be manufactured next month. Predict the production cost for next month.

There are different categories of costs.

Answered: Exercise #2 Monokubs produces frozen…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter17: Activity Resource Usage Model And Tactical Decision Making

Section: Chapter Questions

Problem 6E: Elliott, Inc., has four salaried clerks to process purchase orders. Each clerk is paid a salary of...

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Exercise #2

Monokubs produces frozen gourmet vegetarian pizzas. The following information is available:

Electricity bills show electricity costs of $3,000 per month plus an average of $0.02 per pizza.
Payroll records show that supervisory salaries total $8,000 per month.
Wage records show that wages and on-costs for production employees are $0.05 per pizza.
Inspection of several invoices from ingredient suppliers indicate that the ingredients per pizza cost on average $1.90.
Depreciation schedules show that the monthly depreciation on factory building and equipment is $21,000.

Required:

Classify the costs in terms of variable, semi-variable and fixed costs, and form a cost function used to calculate monthly production cost.
Assume that 7,500 pizzas will be manufactured next month. Predict the production cost for next month.

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