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below. The vertical axis on each graph represents total cost and
the horizontal axis represents the level of activity
(volume).
For each of the following situations, identify the graph that
illustrates the cost behavior pattern involved (any graph
may be used more than once). Just write the graph number that
represents the cost: for example if you think that graph#11
represents a cost then simply type 11 in the box.
a) Electricity bill — a flat fixed charge, plus a variable cost
after a certain number of kilowatthours are
used? unanswered
b) City water bill, where the first 1,000,000 gallons or less is
$1,000 flat fee; Next 10,000 gallons are $0.003 per gallon used;
Next 10,000 gallons are $0.006 per gallon used; and Next 10,000
gallons are $0.009 per gallon used; and so
on... unanswered
c) Depreciation of equipment, where the amount is computed by
the reducing balance method. unanswered
d) Rent on a factory building donated by the city, where the
agreement calls for a fixed fee payment unless 200,000 labor-hours
or more are worked, in which case no rent need be
paid. unanswered
e) Boxes for finished outputs. unanswered
f) Cost of raw materials, where the cost starts at $7.50 per
unit and then decreases by 5 cents per unit for each of the first
100 units purchased, after which it remains constant at $2.50 per
unit used. unanswered
g) Cost of raw material used fixed at
$5/unit. unanswered
h) Rent on a factory building donated by the county, where the
agreement calls for rent of $100,000 less $1 for each direct
labor-hour worked in excess of 200,000 hours, but a minimum rental
payment of $20,000 must be paid. unanswered
i) Use of a machine under a lease, where a minimum charge of
$1,000 is paid for up to 400 hours of machine time. After 400 hours
of machine time, an additional charge of $2 per hour is paid up to
a maximum charge of $2,000 per
period. unanswered
j) $5/hour payment to the guard, whereby the maximum payment can
be $400 a week.
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