Question
Galaxy Ltd. needs to identify the cost behavior of the three costs shown below. Cost information is provided for three months. Month Units Produced Total
Galaxy Ltd. needs to identify the cost behavior of the three costs shown below. Cost information is provided for three months.
| Month | Units Produced | Total Costs Cost X | Costs per Unit | Total Costs Cost Y | Costs per Unit | Total Costs Cost Z | Costs per Unit |
|---|---|---|---|---|---|---|---|
| 1 | 2,000 | $4,000 | $6,000 | $8,000 | |||
| 2 | 4,000 | $4,000 | $8,500 | $15,000 | |||
| 3 | 1,000 | $4,000 | $5,000 | $5,000 |
Required: a. Calculate the cost per unit, and then identify how the cost behaves for each of the three costs (fixed, variable, or mixed). Explain your answers.
b. Explain how understanding cost behavior can assist in decision-making.
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Financial Accounting Tools for Business Decision Making
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine
6th Canadian edition
1118644948, 978-1118805084, 1118805089, 978-1118644942
