Exercise 2-5 Fixed and Variable Costs [LO5]

Mikes Radiator Services specializes in the repair and replacement of radiators for passenger vehicles. Variable and fixed costs related to installation activities for the most recent month (January) are listed below:

Item
Number of radiators replaced		140
Variable expenses:
Direct materials (new radiators)	$	70,000
Direct labour (2 hours per installation)		7,000
Indirect materials		700
Fixed expenses:
Installation supervisors wages	$	12,992
Equipment depreciation		1,624
Insurance and utilities for garage		1,204

Required:

1. Calculate the per unit amounts for each of the variable expense and fixed expense items in January.

2. Mike expects that 112 radiators will be installed in February and that this level of activity is within the relevant range for all variable and fixed expenses.

a & b-1. Calculate the total expense and per unit amounts for each of the variable and fixed cost items above. (Round "per unit" answers to 2 decimal places.)

b-2. This part of the question is not part of your Connect assignment.