The following data have been collected for four different cost items.

Cost Item Cost at 100 units Cost at 140 units

W $8,000 $10,560
X $ 5,000 $ 5,000
Y $ 6,500 $ 9,100
Z $6,700 $ 8,580

Which of the following classifications of these cost items by cost behavior is correct?

Cost W Cost X Cost Y Cost Z
A) variable fixed mixed variable
B) mixed fixed variable mixed
C) variable fixed variable variable
D) mixed fixed mixed mixed

a. Option A
b. Option B
c. Option C
d. Option D

Question

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Dryomys Dryomys · Answer 1 · 2020-01-04T09:06:10+01:00

Answer:

Option (B) is correct.

Explanation:

W.

For finding the variable expenses = change in the cost ÷ change in the quantity

= (10,560 - 8,000) ÷ (140 - 100)

= 2560 ÷ 40

= 64 per unit

total variable expenses for 100 units 64 × 100 = 6400

fixed expenses = 8000 - 6400

= 1600 so it is of MIXED

X.

Here at even different quantity cost is same so it is of fixed expenses

Y.

For variable expenses = (9100-6500) ÷ (140-100)

= 65 per unit

for variable expenses = 65 × 100

= 6,500

so it is of fully variable expenses

Z.

variable expenses = (8,580 - 6,700) ÷ (140 - 100)

= 47 per unit

= 47 × 100

= 4,700

so it is of mixed expenses