From a Cost Behavior Perspective, What Type of Cost Is

question 61

Essay

From a cost behavior perspective, what type of cost is this?
2. If Ai plans to extract 875 tons, is the company being very "cost effective" with respect to Cortez's billing rates? Briefly discuss.
C. 1. Step-fixed.
2. No. Notice that the bill will be $70,000 for A-1's tonnage, and the company could have Cortez haul up to 1,099 tons for the same cost. Ideally, Ai should try to move to the right side of the step to get a better return on its investment.

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Definitions:

Increase by

Refers to the act of becoming larger or more by a specific amount or rate.

Rate of Return

Variation in the value of an investment over a specific duration, measured as a percentage of the investment's starting cost.

Annual Dividend

The total dividend payment a shareholder receives from a company over one fiscal year.

Increasing the Dividend

The action by a company to raise the amount of money paid to shareholders out of its profits on a per-share basis.