Font Paragraph 2-A4 Types of Cost Behavior Identify the following planned costs
ID: 419308 • Letter: F
Question
Font Paragraph 2-A4 Types of Cost Behavior Identify the following planned costs as (a) variable costs, (b) fixed costs, (c) mixed costs, or (d) step costs. For variable costs and mixed costs, indicate the most likely cost driver 1. Public relations employee 2 Crew supervisor in a Lands' End mail-order house; a new supervisor is added for every 12 workers on to be paid by Intel 3. Sales commissions based on revenue dollars, payments to be made to advertising salespersons employed by radio station WCCO. Minneapolis 4. Jet fuel costs of Southwest Airlines 5. Total costs of renting trucks by the city of Nashville: charge is a lump sum of $300 per month plus $.20 per mile 6. Straight-line depreciation on desks in the office of an attorney 7. Advertising costs, a lump sum, planned by ABCInc 8 Rental payment by the Intemal Revenue Service on a five year lease for office space in a private tling on a per-case basis 11. Total repairs and maintenance of a university dassroom building Ctrl)Explanation / Answer
Types of Cost Behavior
Fixed cost is the cost component which remains fixed and does not change with the change in output.
Variable cost component changes with the change in output
Mixed cost comprises of cost component which have certain fixed and certain variable cost component
Step Cost is the cost component where it is constant for a given level of activity and increases or decreases once a threshold is reached.
1. Public Relations employee compensation to be paid by Intel.
Fixed Cost
2. Crew Supervisor in a Lands' End mail order house, a new supervisor is added for every 12 workers employed.
Step Cost
3. Sales commissions based on revenue dollars, payments to be made to advertising sales persons employed by radio station, WCCO Minneapolis
Variable Cost
4. Jet fuel cost of Southwest Airlines
Variable Cost
5. Total costs of renting trucks by the city of Nashville, charge is a lump-sum of $300 per month plus $20 per mile.
Mixed Cost
6. Straight-line depreciation on desks in the office of an attorney.
Fixed Cost
7. Advertising cost, a lump-sum, planned by ABC Inc
Fixed Cost
8. Rental payment by the Internal Revenue Service on a five year lease for office space in a private office building
Step Cost
9. Advertising allowance granted to wholesaler by 7-Up bottling on per case basis
Variable Cost
10. Compensation of lawyers employed internally by Miocrosoft
Fixed Cost
11. Total Repairs and maintenance of a University classroom building
Variable Cost