Chapter 6, Problem 6.17SE

Identify cost behavior graph (Learning Objectives 1 & 2)

Following are a series of cost behavior graphs. The total cost is shown on the vertical (y) axis and the volume (activity) is shown on the horizontal (x) axis.

For each of the following situations, identify the graph that most closely represents the cost behavior pattern of the cost in that situation. Some graphs may be used more than once or not at all.

1. a. Monthly factory equipment depreciation, straight-line method is used
2. b. Monthly electric cost for a convenience store; $50 base monthly fee plus $.006 per kilowatt used
3. c. Total salary costs for a craft supplies store; managers are paid a salary, and the other workers are paid by the hour
4. d. Oil disposal fees for an automotive maintenance company. The oil disposal fee is based on two components: a $100 base fee plus a usage fee (to encourage reduction of waste):

Up to 10 barrels	$ 6 per barrel
11–25 barrels	$ 9 per barrel
More than 26 barrels	$13 per barrel

1. e. Monthly smartphone expense for a mobile grooming business; the phones are billed at a rate of $40 for unlimited voice, data, and text for each cell phone
2. f. Wood costs for a table manufacturer; the cost of direct materials per table is $52.00
3. g. Customer service representatives are paid $15.25 per hour
4. h. Monthly vehicle lease costs for a company that pays $295 month plus $0.25 per mile for any miles driven over 1,000 per month
5. i. Monthly gas bill for the restaurant’s delivery vehicles; cost of gas is constant at $1.95 per gallon
6. j. Monthly copier costs; the lease is $110 per month with a fee of $0.02 per copy for any copies over 50,000 copies in that month