Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 29

Cost Relationships The following costs are for Optical View Inc., a contact lens manufacturer:

Output in Units	Fixed Costs	Variable Costs	Total Costs
250	$4,750	$ 7,500	$12,250
300	4,750	9,000	13,750
350	4,750	10,500	15,250
400	4,750	12,000	16,750

Required

1. Graph total cost, total variable cost, and total fixed cost.

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2. Graph the per-unit total cost, per-unit variable cost, and per-unit fixed cost.

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3. Discuss the behavior of the fixed, variable, and total cost.

Step 1 of 3

Cost Relationships (15min)

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1.?Total costs: See Exhibit below

             Output   Total Costs   Total Costs Per Unit  

              250       $12,250            $49.00

              300       $13,750            $45.83

              350       $15,250            $43.57

              400       $16,750            $41.88

   Total variable costs:

             Output   Total Variable Costs

              250          $ 7,500

              300          $ 9,000

              350          $10,500

              400          $12,000       

   Total fixed costs = $4,750