The left column lists several cost ans, In the blank space beside each of the nu

Question

The left column lists several cost ans, In the blank space beside each of the numbers in the right column, write the letter ibcrihed by the definition. classifications. The right column presents short definitions of those Exercise 18-2 of the cost best Cost behavior defined C1 1·This cost is the combined amount of all the other costs. 2·This cost remains constant over a limited range of volume: when A. Total cost B. Mixed cost C. Variable cost D. Curvilinear cost E Step-wise cost F. Fived cos it reaches the end of its limited range, it changes by a lump sum and remains at that level until it exceeds another limited range 3. This cost has a component that remains the same overall vol- ume levels and another component that increases in direct pro- 4. This cost increases when volume increases, but the increase is 5. This cost remains constant over all volume levels within the pro- 6. This cost increases in direct proportion to increases in volume; portion to increases in volume. not constant for each unit produced. ductive capacity for the planning period. its amount is constant for each unit produced.

Explanation / Answer

Answers for 1 to 6 are:-

1. Total cost A

2. Step wise cost E

3. Mixed cost B

4. Curvilinear Cost D

5. Fixed cost F

6. Variable cost C

Now some important aspects

Total Cost=Fixed cost+Variable cost

Fixed cost do not vary with production volume.

Variable cost that rise or fall in direct proportion to production volume.

Mixed cost consist of fixed component and a variable component.

Curvilinear Cost is an irregular cost that increases at different rates as total output increases.

Stepwise cost is fixed cost within certain boundaries , outside of which it will change.

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