Consider the following cost data for the cost object; number of machine setups. Each set of costs (A, B, and C)is from a different type of manufacturing operation and represents the cost behaviour for the cost of that company's machine setups. Number of
Machine Setups Cost A Cost B Cost C
0 $ 0 $80 $ 5
10 20 79 37
20 40 82 66
30 60 78 91
40 80 81 123
50 100 79 154
Cost C is best described as:
A)Fixed
B)Variable
C)Mixed
D)Indirect

Question

Quizplus · Accepted Answer

Cost C shows a mixed cost behavior as it has both fixed and variable components. The fixed cost component is represented by the intercept of the line (y-axis) and is $5, and the variable cost component is represented by the slope of the line or the change in cost per unit change in machine setups, which is $2.2 ((154-5)/(50-0)) in this case.

Consider the Following Cost Data for the Cost Object; Number