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Following are five series of costs A through E measured at various volume levels. Examine each series and identify which is fixed, variable, mixed, step-wise, or curvilinear. Volume (Units) Series A Series B Series C Series D Series E
0 $ 0 $ 2,500 $ 0 $ 1,000 $ 5,000
400 3,600 3,100 6,000 1,000 5,000
800 7,200 3,700 6,600 2,000 5,000
1,200 10,800 4,300 7,200 2,000 5,000
1,600 14,400 4,900 8,200 3,000 5,000
2,000 18,000 5,500 9,600 3,000 5,000
2,400 21,600 6,100 13,500 4,000 5,000

Respuesta :

Answer:

Series A: It is in the nature of variable cost . As we can see that that the cost per unit is (3600 /400 = $ 9 per unit ) and it is applicable at each level of activity.

Series B: Its is in the nature of mixed cost i.e. blend of fixed and variable cost . here Fixed cost is $ 2,500 and Variable cost per unit is ( 3100-2500 /400 units = 1.50 per unit). The same is applicable for each level of activity.

Series C: It is also in the nature of mixed cost (i.e. blend of fixed and variable cost. Here the fixed cost is $ 5400 adn variable cost per unit ( change in cost / change in units ) ( 6600-6000 /800-400 = $ 1.50 per unit)

Series D: It is in the nature of Step wise cost. In Step wise cost, the cost will increase by a fixed amount after it crosses a defined level of activity. Here we can see that the cost is increased by $ 1000 adn the cost structure is as follows:

For Activity level of 0 and 400 units, Cost is $ 1000

For activity level of 800 and 1200 units, Cost is $ 2000 (increase by fixed amount of $ 1,000 for next level )

For activity level of 1600 and 2000 units, cost is $ 3000 (again increase by fixed amount $ 1000 for next level of activity)

Series E: It is in the nature of Fixed cost. As we can see that for any level of activity, the cost remains same i.e. $ 5,000

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