Classifying Cost Behavior Explain your answer: Explain your answer: For each of
ID: 2330819 • Letter: C
Question
Classifying Cost Behavior
Explain your answer:
Explain your answer:
For each of the graphs displayed following the problem, select the most appropriate cost behavior pattern where the lines represent the cost behavior, the vertical axis represents total costs, the horizontal axis represents total volume, and the dots represent actual costs. Each pattern may be used more than once.
A cellular telephone bill when a flat fee is charged for the first 500 minutes of use per month and additional use costs $0.25 per minute
Total selling and administrative costs
Total labor costs when employees are paid per unit produced
Total overtime premium paid production employees
Average total cost per unit
Salaries of supervisors when each one can supervise a maximum of 10 employees
Total idle time costs when employees are paid for a minimum 40-hour week
Materials costs per unit
Total sales commissions
Electric power consumption in a restaurant
Total costs when high volumes or production require the use of overtime and obsolete
equipment
A good linear approximation of actual costs
A linear cost estimation valid only within the relevant range
Graphs for Mini Exercise 2-14 Some other relationship (10) (12)Explanation / Answer
Answer:
1. A cellular telephone bill when a flat fee is charged for the first 500 minutes of use per month and additional use costs $0.25 per minute.
Graph 2 because there is positive relationship between the telephone bill and total volume. As one variable increases, the other variable also increases and vice versa.
2. Total selling and administrative costs
Graph 11 because total selling and administrative costs decreases when volume increases.
3. Total labor costs when employees are paid per unit produced
Graph 7 because there is positive relationship between the total labor costs and total volume. As one variable increases, the other variable also increases and vice versa.
4. Total overtime premium paid production employees
Graph 5 because overtime premium paid increases with total volume after some point of time.
5. Average total cost per unit
Graph 3 because average cost per unit has a linear relationship with total volume.
6. Salaries of supervisors when each one can supervise a maximum of 10 employees
Graph 8 because salaries of superviors increases after some units increase of volume.
7. Total idle time costs when employees are paid for a minimum 40-hour week
Graph 11 because total idle time costs decreases after certain increase volume.
8. Materials costs per unit
Graph 10 because materials cost per unit do not have a linear relationship with total volume.
9. Total sales commissions
Graph 4 because total sales comissions is constant and increases later with the total volume.
10. Electric power consumption in a restaurant
Graph 7 because there is positive relationship between the total volume and electric power consumption. As one variable increases, the other variable also increases and vice versa.
11. Total costs when high volumes or production require the use of overtime and obsolete equipment.
Graph 8 because total costs increase with volume after some units increase of volume.
12. A good linear approximation of actual costs
Graph 8 because total costs increase with volume after some units increase of volume.
13.A linear cost estimation valid only within the relevant range
Graph 2 because linear cost estimation increases with volume after certain increase in volume.
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