O&W Metal Company makes designer emblems for luxury vehicles. Each emblem is handcrafted out of titanium to the customer’s design specifications. O&W’s artisans are paid an hourly wage and work between 30 and 60 hours a week. O&W uses the straight-line method of depreciation. To ensure that each emblem conforms to the customer’s specifications, O&W has each emblem inspected by an independent company. The inspection company charges a set price per month, plus an additional amount for each item inspected. After inspection, each emblem is shipped in a crush-resistant shipping container.

a. Which of O&W’s costs (titanium, artisan wages, equipment depreciation, inspection, shipping containers)

is a mixed cost?

b. Data on total mixed costs and total production for O&W’s five months of operations are as follows:

Using the high-low method, determine the (1) variable cost per unit and (2) total fixed costs.

c. O&W estimates that it will produce 2,000 units during January. Using your answer to (b), estimate the (1) total variable costs and (2) fixed cost per unit for January.

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August September October Units Produced 1,000 units 1,200 1,600 November 2,500 December 2,200 Total Cost $ 80,000 86,000 98,000 125,000 116,000