Identifying Cost Behavior. Mountainside Company is trying to identify the cost behavior of the three costs that follow. Cost information is provided for three months. Cost A Cost B Cost C Month Units Produced Total Costs Cost per Unit Total Costs Cost per Unit Total Costs Cost per Unit 1 1,500 $1,500 _____ $4,500 _____ $3,000 _____ 2 3,000 1,500 _____ 5,250 _____ 6,000 _____ 3 750 1,500 _____ 3,750 _____ 1,500 _____ Required: Calculate the cost per unit, and then identify how the cost behaves for each of the three costs (fixed, variable, or mixed). Explain the reasoning for your answers. How does identifying cost behavior patterns help managers?
Identifying Cost Behavior. Mountainside Company is trying to identify the cost behavior of the three costs that follow. Cost information is provided for three months. Cost A Cost B Cost C Month Units Produced Total Costs Cost per Unit Total Costs Cost per Unit Total Costs Cost per Unit 1 1,500 $1,500 _____ $4,500 _____ $3,000 _____ 2 3,000 1,500 _____ 5,250 _____ 6,000 _____ 3 750 1,500 _____ 3,750 _____ 1,500 _____ Required: Calculate the cost per unit, and then identify how the cost behaves for each of the three costs (fixed, variable, or mixed). Explain the reasoning for your answers. How does identifying cost behavior patterns help managers?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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| Identifying Cost Behavior. Mountainside Company is trying to identify the cost behavior of the three costs that follow. Cost information is provided for three months. | |||||||
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Cost A | Cost B | Cost C | ||||
| Month | Units Produced | Total Costs | Cost per Unit | Total Costs | Cost per Unit | Total Costs | Cost per Unit |
| 1 | 1,500 | $1,500 | _____ | $4,500 | _____ | $3,000 | _____ |
| 2 | 3,000 | 1,500 | _____ | 5,250 | _____ | 6,000 | _____ |
| 3 | 750 | 1,500 | _____ | 3,750 | _____ | 1,500 | _____ |
Required:
- Calculate the cost per unit, and then identify how the cost behaves for each of the three costs (fixed, variable, or mixed). Explain the reasoning for your answers.
- How does identifying cost behavior patterns help managers?
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