Use unit cost data to forecast total costs (Learning Objective 2)

Mailbox Magic produces decorative mailboxes. The company’s average cost per unit is $26.43 when it produces 1,000 mailboxes.

a. What is the total cost of producing 1,000 mailboxes? 26

b. If $18,000 of the total costs are fixed, what is the variable cost of producing each mailbox? C. Write Mailbox Magic's cost equation. 26430-8.4-000 + 83.

d. If the plant manager uses the average cost per unit to predict total costs, what would his forecast be for 1,200 mailboxes? \\

e. If the plant manager uses the cost equation to predict total costs, what would his forecast be for 1,200 mailboxes? 16

f. What is the dollar difference between your answers to Questions d and e? Which approach to forecasting costs is appropriate? Why? 3600