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Question 3 (10 points) Match each cost with the description or example that most closely describes it. The rental cost of a machine is $1,000
Question 3 (10 points) Match each cost with the description or example that most closely describes it. The rental cost of a machine is $1,000 per month plus $5 per hour of run time. A cost which could be avoided, but is often incurred in order to create future economic benefit. > A cost which can be easily, conveniently and accurately traced to a particular cost object. 1. Fixed cost On a cost-per-unit basis, this cost varies inversely with activity and allows for economies of scale. 2. Variable cost 3. Mixed cost The cost of products which are scrapped because they are unsaleable and would cost too much to rework. 4. Batch-level cost 5. Discretionary cost > 6. Direct cost A cost which remains constant until some threshold of activity is crossed, at which time the cost increases. 7. Indirect cost 8. Internal failure cost > A cost which must be incurred, at least in some amount, and cannot be entirely avoided. 9. Product-level cost 10. Committed cost A cost which requires some method of allocation to relate it to a particular cost object. > The cost incurred to certify that a new drug meets Food and Drug Administration approval and can be legally sold for its intended purpose. > Cost-per unit remains constant regardless of activity
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