Branson mailbox produces decorative mailboxes. the company's average cost per unit is $ 22.43 when it produces 1 comma 200 mailboxes. requirements 1. what is the total cost of producing 1 comma 200 mailboxes? 2. if $ 18 comma 516 of the total costs are fixed, what is the variable cost of producing each mailbox? 3. write branson mailbox's cost equation. 4. if the plant manager uses the average cost per unit to predict total costs, what would the forecast be for 1 comma 600 mailboxes? 5. if the plant manager uses the cost equation to predict total costs, what would the forecast be for 1 comma 600 mailboxes? 6. what is the dollar difference between your answers to questions 4 and 5? which approach to forecasting costs is appropriate? why?

1) $26,916

2) $7

3) Cost = $7 × Number of units + $18,516

4) $35,888

5) $29,716

6) $6,172

Explanation:

Given:

The company's average cost per unit = $22.43

Number of units produced = 1,200

1) Total cost of producing 1,200 mailbox = Per unit cost × Number of units

= $22.43 × 1,200

= $26,916

2) Fixed cost = $18,516

Now,

Total cost = Fixed cost + variable cost

$26,916 = $18,516 + variable cost

or

variable cost  = $26,916 - $18,516 = $8,400

Per unit variable cost =

=

= $7

3) Cost = Total variable cost + Total fixed cost

or

Cost = $7 × Number of units + $18,516

4) Number of units = 1,600

Total cost = Average cost per unit × Total units

= $22.43 × 1,600

= $35,888  

5) Number of units = 1,600

therefore,

Total cost = $7 × Number of units + $18,516

= $7 × 1,600 + $18,516

= $11,200 + $18,516

= $29,716

6) Difference between the cost = $35,888 - $29,716 = $6,172