M14-13. Classifying Cost Behavior For each of the following situations, select t

Question

M14-13. Classifying Cost Behavior For each of the following situations, select the most appropriate cost behavior pattern (as shown in the illustrations following this problem) where the lines represent the cost behavior pattern, the vertical axis represents costs, the horizontal axis represents total volume, and the dots represent actual costs. Each pattern may be used more than once.

a. Variable costs per unit

b. Total fixed costs

c. Total mixed costs

d. Average fixed costs per unit

e. Total current manufacturing costs

f. Average variable costs

g. Total costs when employees are paid $15 per hour for the first 40 hours worked each week and$20 for each additional hour.

h. Total costs when employees are paid $15 per hour and guaranteed a minimum weekly wage of $300.

I. Total costs per day when a consultant is paid $200 per hour with a maximum daily fee of $1,000.

j. Total variable costs

k. Total costs for salaries of social workers where each social worker can handle a maximum of 25 cases

L. A water bill where a flat fee of $800 is charged for the first 100,000 gallons and additional water costs $0.005 per gallon

m. Total variable costs properly used to estimate step costs n. Total materials costs o. Rent on exhibit space at a convention

Explanation / Answer

M14-13.

Correct Pattern:

Pattern No 3

(It reflects the total variable cost at each volume level that can be used to calculate variable cost per unit)

Correct Pattern:

Pattern No. 8

(It is fixed and it does not change with the change in production level)

Correct Pattern:

Pattern No. 11

(It starts with fixed cost only when volume is zero. Then, it grows upward)

Correct Pattern:

Pattern No. 9

(It is highest when volume is zero and then it comes down with increase in volume.)

Correct Pattern:

Pattern No. 11

(It starts with fixed cost only when volume is zero. Then, it grows upward)

Correct Pattern:

Pattern No 3

(It reflects the total variable cost at each volume level that can be used to calculate variable cost per unit)

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