Ross Company Has the Following Information Available Regarding Costs at Various

question 103

Essay

Ross Company has the following information available regarding costs at various levels of monthly production:
$\begin{array}{lrr}\text { Production volume }&\underline{\underline{7,000}}&\underline{\underline{10,000}}\\\\ \text { Direct materials } & \$ 70,000 & \$ 100,000 \\\text { Direct labour } & 56,000 & 80,000 \\\text { Indirect materials } & 21,000 & 30,000 \\\text { Supervisors' salaries } & 12,000 & 12,000 \\\text { Depreciation on plant and equipment } & 10,000 & 10,000 \\\text { Maintenance } & 32,000 & 44,000 \\\text { Utilities } & 15,000 & 21,000 \\\text { Insurance on plant and equipment } & 1,600 & 1,600 \\\text { Property taxes on plant and equipment } &\underline{ 2,000 }&\underline{ 2,000} \\\quad \text { Total } &\underline{ \$ 219,600} &\underline{ \$ 300,600}\end{array}$
a.Identify each cost as being variable,fixed,or mixed by writing the name of each cost under one of the following headings:
Variable Costs Fixed Costs Mixed Costs
b.Develop an equation for total monthly production costs.
c.Predict total costs for a monthly production volume of 8,000 units.

---

Definitions:

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, usually with guaranteed dividends, but without voting rights.

Par

A term that refers to a financial instrument trading at its face or nominal value.

Rate

The percentage at which a particular event occurs, often used in the context of interest or growth rates.

Dividends

Capital paid by a corporation to its shareholders, mostly extracted from the enterprise's earnings.