Answers
Part 1
| Cost | Cost function | Explanation |
| Maintenance | Mixed | The cost neither remains constant in total nor remains constant per unit |
| Health insurance | Fixed | Although the cost driver varies from month to month, the total cost remains constant |
| Shipping costs | Variable | The cost per unit remains constant each month |
Part 2
| Maintenance | Y=a+bX |
| Health insurance | Y=a |
| Shipping costs | Y= bX |
| Cost function | |
| Maintenance | Y = $4180 + $2.60 per machine hour |
| Health insurance | Y = $8590 + 0 per employee |
| Shipping costs | Y = $0 + $3.40 per unit shipped |
Shipping cost per unit = 24446/7190 = $3.40
Maintenance cost:
Variable cost = (5636-4505)/(560-125) = 2.60
Fixed cost = 5636-(2.60*560) = $4180
Part 3
Monthly operating cost = $12770 + $2.60 per machine hour + $3.40 per unit shipped
Part 4
Monthly operating cost = $12770+ ($2.60*470)+ ($3.40*9100) = $44932
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