(Cost behavior) A company’s cost structure may contain numerous different cost behavior patterns. Below are descriptions of several different costs; match these to the appropriate graphs. On each graph, the vertical axis represents cost and the horizontal axis represents level of activity or volume.

Identify, by letter, the graph that illustrates each of the following cost be¬ havior patterns. Graphs may be used more than once.

(1) Cost of raw materials, where the cost decreases by 6 cents per unit for each of the first 150 units purchased, after which it remains constant at $2.75 per unit.
(2) City water bill, which is computed as follows:

(3) Rent on a factory building donated by the city, where the agreement pro¬ vides for a fixed-fee payment, unless 250,000 labor hours are worked, in which case no rent needs to be paid.
(4) Cost of raw materials used.
(5) Electricity bill—a flat fixed charge of $250 plus a variable cost after 150,000 kilowatt-hours are used.
(6) Salaries of maintenance workers if one maintenance worker is needed for every 1,000 hours or less of machine time.

(7) Depreciation of equipment using the straight-line method.
(8) Rent on a factory building donated by the county, where the agreement provides for a monthly rental of $100,000 less $1 for each labor hour worked in excess of 200,000 hours. However, a minimum rental payment of $20,000 must be made each month.
(9) Rent on a machine that is billed at $1,000 for up to 500 hours of machine time. After 500 hours of machine time, an additional charge of $1 per hour is paid up to a maximum charge of $2,500 per period.
(AICPA adapted)LO1

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