Custom-Molding, Inc., is a manufacturer of molded plastic action figures that fast-food restaurants purchase to include in children’s meal packs. Each action figure takes about 0.90 ounces of plastic costing $0.03 per ounce and is molded in a mold. Custom-Molding contracts with an outside supplier to develop new molds based on current movie and cartoon characters. Each set of molds costs $5,000 and could be used indefinitely but, practically speaking, lasts for three months and makes 100,000 action figures. (After that, the children are tired of those figures and want to move on to others.) Direct labor and variable overhead cost $0.02 per unit and other facility costs total $10,000 per year. Custom-Molding, Inc., produces 400,000 action figures over the course of the year.

Required

1. What is the total cost of producing action figures for the year? The per-unit cost?

2. Categorize each resource as flexible or committed. What is the cost behavior of each resource?

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