Matching graphs with descriptions of cost behaviour. (D. Green, adapted) (20 minutes) Given below are a number
Question:
Matching graphs with descriptions of cost behaviour. (D. Green, adapted) (20 minutes) Given below are a number of charts, each indicating some relationship between cost and a cost driver. No attempt has been made to draw these charts to any particular scale; the absolute numbers on each axis may be closely or widely spaced. bhy7
Indicate by number which one of the charts best fits each of the situations or items described. Each situation or item is independent of all the others; all factors not stated are assumed to be irrelevant. Some charts will be used more than once; some may not apply to any of the situations.
Note that category 14,‘No relationship’, is not the same as 15,‘Some other pattern’.
If the horizontal axis represents the production output over the year and the vertical axis represents total cost or revenue, indicate the one best pattern or relationship for:
1. Direct materials costs.
2. Supervisors’ salaries.
3. A breakeven chart.
4 - Mixed costs—for example, fixed electrical power demand charge plus variable usage rate.
5. Depreciation of plant, calculated on a straight-line basis.
6. Data supporting the use of a variable cost rate, such as manufacturing labour cost of SFr 14 per unit produced.
7. Incentive bonus plan that pays managers SFr 0.10 for every unit produced above some level of production.
8. Interest charges on money borrowed at a fixed rate of interest to finance the acquisition of a plant, before any payments on principal.
Intermediate level
Step by Step Answer:
Management And Cost Accounting
ISBN: 9780130805478
1st Edition
Authors: Charles T. Horngren, Alnoor Bhimani, Srikant M. Datar, George Foster