Cost Behavior, Classification

Smith Concrete Company owns enough ready-mix trucks to deliver up to 140,000 cubic yards of concrete per year (considering each truck's capacity, weather, and distance to each job). Total truck depreciation is $300,000 per year. Raw materials (cement, gravel, and so on) cost about $26 per cubic yard of cement.

1. On your own paper, prepare a graph for truck depreciation. Use the vertical axis for cost and the horizontal axis for cubic yards of cement. Select the following amounts from the graph.

Depreciation cost of truck if it delivers 30,000 cubic yards of concrete in one year.

Depreciation cost of truck if it delivers 70,000 cubic yards of concrete in one year.