# Question: Acme Mailboxes produces decorative mailboxes The company s average cost per

Acme Mailboxes produces decorative mailboxes. The company’s average cost per unit is $ 23.43 when it produces 1,400 mailboxes.

Requirements

1. What is the total cost of producing 1,400 mailboxes?

2. If $ 20,202 of the total costs are fixed, what is the variable cost of producing each mailbox?

3. Write Acme Mailboxes’ cost equation.

4. If the plant manager uses the average cost per unit to predict total costs, what would the forecast be for 1,600 mailboxes?

5. If the plant manager uses the cost equation to predict total costs, what would the forecast be for 1,600 mailboxes?

6. What is the dollar difference between your answers to Requirements 4 and 5? Which approach to forecasting costs is appropriate? Why?

Requirements

1. What is the total cost of producing 1,400 mailboxes?

2. If $ 20,202 of the total costs are fixed, what is the variable cost of producing each mailbox?

3. Write Acme Mailboxes’ cost equation.

4. If the plant manager uses the average cost per unit to predict total costs, what would the forecast be for 1,600 mailboxes?

5. If the plant manager uses the cost equation to predict total costs, what would the forecast be for 1,600 mailboxes?

6. What is the dollar difference between your answers to Requirements 4 and 5? Which approach to forecasting costs is appropriate? Why?

## Relevant Questions

Solar Entertainment is a provider of cable, Internet, and on- demand video services. Solar currently sends monthly bills to its customers via the postal service. Because of a concern for the environment and recent increases ...The manager of the main laboratory facility at MetroFit Center is interested in being able to predict the overhead costs each month for the lab. The manager believes that total overhead varies with the number of lab tests ...Herring Manufacturing manufactures a single product that it will sell for $ 93 per unit. The company is looking to project its operating income for its first two years of operations. Cost information for the single unit of ...Billie Gable is the Chief Operating Officer at Fremont Hospital in Roseville, Minnesota. She is analyzing the hospital’s overhead costs but is not sure whether nursing hours or the number of patient days would be the best ...Use the information from the Crystal Cruiseline Data Set to compute the following: a. What is the contribution margin per passenger? b. What is the contribution margin ratio? c. Use the unit contribution margin to project ...Post your question