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Question One CREATING AND USING A COST FORMULA (LO 3) Big Thumbs Company manufactures portable flash drives for computers. Big Thumbs incurs monthly depreciation costs of $15,000 on its plant equipment and monthly advertising costs of $3,000 to place advertisements in magazines. Also, each drive requires materials and manufacturing overhead resources. On average, the company uses 280,000 grams of materials to manufacture 5,000 flash drives per month. Each gram of material costs $0.10. In addition, manufacturing overhead resources are driven by machine hours. On average, the company incurs $22,500 of manufacturing overhead resources to produce 5,000 flash drives per month. Required: 1. Create a formula for the monthly cost of flash drives for Big Thumbs. 2. If the department expects to manufacture 6,000 flash drives next month, what is the expected fixed cost (assume that 6,000 units is within the company's current relevant range)? Total variable cost? Total manufacturing cost (i.e., both fixed and variable)? Question Two USING HIGH-LOW TO CALCULATE FIXED COST, .CULATE THE VARIABLE RATE, AND CONSTRUCT A COST FUNCTION (LO 3) Pizza Vesuvio makes specialty pizzas. Vesuvio's controller wants to calculate the fixed and variable costs associated with labour used in the restaurant. Data for the past eight months were collected: Month Labour Cost (5) Employee Hours January 7,000 360 February 8,140 550 March 9,010 585 April 9,787 610 May 8,490 480 June 2,450 350 July 9,490 570 August 7,531 310 Required: Using the high-low method, calculate the fixed cost of labour, calculate the variable rate per employee hour, and construct the cost formula for total labour cost

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