Tornado Enterprises has the following information available

Tornado Enterprises has the following information available regarding costs at various levels of monthly production: 

Production volume                                                  7,000                          10,000 

Direct materials                                                    $ 70,000                      $100,000 

Direct labour                                                           56,000                           80,000 

Indirect materials                                                    21,000                           30,000 

Supervisors’ salaries                                               12,000                           12,000 

Depreciation on plant and equipment                     10,000                           10,000 

Maintenance                                                            32,000                           44,000 

Utilities                                                                    15,000                           21,000 

Insurance on plant and equipment                            1,600                             1,600 

Property taxes on plant and equipment                    2,000                             2,000 

Total                                                                      $219,600                     $300,600   

a.      Identify each cost as being variable, fixed, or mixed by writing the name of each cost under one of the following headings: Variable Costs    Fixed Costs     Mixed Costs   

b.     Develop an equation for total monthly production costs. Hint: Use total monthly production costs and the production volumes to develop the equation. 

c.      Predict total costs for a monthly production volume of 8,000 units.

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