The Cost Graphs in the Illustration Below Shows Various Types

question 208

Essay

The cost graphs in the illustration below shows various types of cost behaviors. For each of the following costs, identify the cost graph that best describes its cost behavior as the number of units produced and sold increases:
a) Sales commissions of $6,000 plus $0.05 for each item sold.
b) Rent on warehouse of $12,000 per month.
c) Insurance costs of $2,500 per month.
d) Per-unit cost of direct labor.
e) Total salaries of quality control supervisors. One supervisor must be added for each additional work shift.
f) Total employer pension costs of $0.35 per direct labor hour.
g) Per-unit straight-line depreciation costs.
h) Per-unit cost of direct materials.
i) Total direct materials cost.
j) Electricity costs of $5,000 per month plus $0.0004 per kilowatt-hour.
k) Per-unit cost of plant superintendent's salary.
l) Salary of the night-time security guard of $3,800 per month.
m) Repairs and maintenance costs of $3,000 for each 2,000 hours of factory machine usage.
n) Total direct labor cost.
o) Straight-line depreciation on factory equipment.

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Definitions:

Reverse Innovation

An innovation seen first, or likely to be used first, in the developing world before spreading to industrialized nations.

Outsourced

The act of hiring external organizations or individuals to perform tasks, handle operations, or provide services that are either difficult to manage or are outside of the business's core competencies.

Sustainable Business

An enterprise that operates in a way that preserves or enhances economic opportunity, environmental health, and social equity for current and future generations.

Well-being

A state of comfort, health, or happiness.