The Cost Graphs Below Show Various Types of Cost Behaviors

question 196

Essay

The cost graphs below show 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:

Auditor Liability

Legal responsibility borne by auditors due to negligence or other failures in their auditing activities.

Restatement Rule

A principle in common law jurisdictions where courts follow authoritative summaries of the common law, often used for clarity and consistency in legal principles.

Third Parties

Individuals or entities that are not directly involved in a contract or legal agreement but may be affected by its outcome.

Ultramares Rule

A legal doctrine determining the liability of accountants for negligence to third parties who rely on their financial reports.