Consider the Pairs of Data Presented Below for 3 Costs

question 128

Essay

Consider the pairs of data presented below for 3 costs of USM Corporation:
Cost Driver A Cost A Cost Driver B Cost B Cost Driver C Cost C
0 1,200 0 0 0 600
80 1,380 130 1,735 110 890
175 1,495 130 1,735 209 1,200
244 1,475 314 5,488 325 1,500
377 1,390 422 6,987 457 1,700
462 1,500 507 8,723 560 2,000
a)Using scatter plots or other informal methods such as studying the variation in cost compared to the variation in cost driver, describe the behaviour of each cost.
b)For each cost that you described above, give one example of a cost that would behave similarly. For variable and mixed costs, also identify the cost driver.

---

Definitions:

Loss on Sale

This refers to the situation where the sale price of an asset is less than its book value, resulting in a financial loss for the entity.

Equity Method

An accounting technique used when an investor holds significant influence over, but not majority ownership of, another company, incorporating the investor's share of the profits and losses.

Equity Method

The equity method is a type of accounting used for investments, where the investment is initially recorded at cost and subsequently adjusted to reflect the investor's share of the net assets of the investee.