1.
2.
3.
Student:
charles posey
Date:
11/9/16
Instructor:
Anthony Battaglia
Course:
ACC-500-Q1001-16TW1-
Battaglia
Assignment:
Module Three Practice
Problems
Select the choice that describes linear-cost behavior.
A.
Linear-cost behavior assumes that costs behave as a straight line. On a graph, the line
intercepts the Y-axis at the variable cost estimate and then the total cost increases
proportionately as the cost driver activity increases. The assumption is that the fixed cost per
unit remains the same over a relevant range of activity.
B.
Assumes that costs behave in an upward sloping curve. On a graph, the line intercepts the
Y-axis at the fixed cost estimate. Total cost increases as the cost driver activity increases with
the variable cost per unit increasing as the level of activity increases.
C.
Linear-cost behavior assumes that costs behave in a downward sloping curve. On a graph,
the line intercepts the Y-axis at the fixed cost estimate. Total cost increases as the cost driver
activity increases with the variable cost per unit decreasing as the level of activity increases.
D.
Linear-cost behavior assumes that costs behave as a straight line. On a graph, the line
intercepts the Y-axis at the fixed cost estimate and then the total cost increases
proportionately as the cost driver activity increases. The assumption is that the variable cost
per unit remains the same over a relevant range of activity.
(1)
fixed cost
step cost
variable cost
(2)
fixed cost
step cost
variable cost
(3)
adding a fixed cost and a step cost together
adding a fixed cost and a variable cost together
adding a step cost and a variable cost together
The following cost function is a mixed cost.
Total cost = $8,000 + $52 x units produced
Requirement
1.
Explain why it is a mixed cost and not a fixed, variable, or step cost.
The $8,000 is a (1)
and the $52 per unit is a (2)
.
By definition,
(3)
produces a mixed cost.
Why are fixed costs also called capacity costs?
Module Three Practice Problems-charles posey
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