QUESTION 23 Based on the following data, how would the cost functiorbe stated if

Question

QUESTION 23 Based on the following data, how would the cost functiorbe stated if Electricity expense Machine hours 10 September $610 O $525+ $o.35 X O $300+ $o.50 x O $500+ $0.50 X O $470 + $0.35 X QUESTION 24 Mastel Company has a variable selling cost. If sales volume increases, how will the total variable cost and the variable cost per unit behave? Total Variable Cost Variable Cost Per Unit Increase Remain constant Decrease Decreasee Increase A. Increase B. Increase .Increase D. Remain constant E Decrease Choice A Choice B

Explanation / Answer

23.

At highest activity, machine hours = 900 and electricity expense $750

At lowest activity, machine hours = 400 and electricity expense $500

Variable cost per machine hour = Difference in cost at highest and lowest activity/Difference in machine hours

Hence, variable cost per machine hour= (750 - 500)/(900 - 400)

= 250/500

= $0.50

Total fixed cost = 750 - (900 x 0.50)

= 750 - 450

= $300

Hence, cost function = 300 + 0.50X

Hence, correct option is (b)

24.

Correct option is (B).

When sales increases, total variable cost also increases but variable cost per unit remains same. Variable cost per unit remains same even if sales increases or decreases but total variable cost varies in direct proportion to sales. If sales increases, total variable cost also increases and if sales decreases, total variable cost also decreases.

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.