8 ltem #5: Classifying Cost Behavior Classify the total costs of each of the fol

Question

8 ltem #5: Classifying Cost Behavior Classify the total costs of each of the following as fixed, variable, mixed, or step. Sales volume is the cost driver. Please enter FC, VC, MC or SC. 10 12 13 Cost Type Description Wages of machine operator who is paid based on number of units produced on the machine Keyboards purchased from a subcontract supplier in a computer assembly plant Pro Salaries of quality inspectors when each inspector can evaluate a maximum of 500 units per day Annual salary for the vice president of manufacturing Electric Raw materials used in production Water consumed by the plant, which is based on a flat fee plus actual consumption Various overhead costs in the factory for incidental components such as small screws and rivets. Fire insurance on factory building 2 16 17 18 19 20 21 taxes 4 er in a facto 23 10

Explanation / Answer

Cost Type Description 1 Variable Wages of machine operator who is paid based on number of units produced on the machine 2 Variable keyboards purchased from a subcontract supplier in a computer assembly plant. 3 Fixed Property Taxes 4 Step Salaries of quality inspectors when each inspector can evaluate a maximum of 500 units per day 5 Fixed Annual salary for the vice president of manufacturing 6 Mixed Electric power in a factory 7 Variable Raw materials used in production 8 Mixed Water consumed by the plant, which is based on a flat fee plus actual consumption 9 Mixed various overhead costs in the factory for incidental components such as small screws and rivets 10 Fixed Fire Insurance on factory building

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