help please. Thanks EX 19-2 Identify cost graphs The following cost graphs illus

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help please.
Thanks

EX 19-2 Identify cost graphs The following cost graphs illustrate various types of cost behavior: Obj. 1 Cost Graph One Cost Graph Two 0 Total Units Produced 0 Total Units Produced Cost Graph Three Cost Graph Four o Total Units Produced 0 Total Units Produced For each of the following costs, identify the cost graph that best illustrates its cost behavior as the number of units produced increases: A. Total direct materials cost B. Electricity costs of $1,000 per month plus $0.10 per kilowatt-hour C. Per-unit cost of straight-line depreciation on factory equipment D. Salary of quality control supervisor, $20,000 per month E. Per-unit direct labor cost

Explanation / Answer

Answer

Cost graph Three.
This is because, direct material cost is variable. If no units are produced, there will be no direct material cost. As the units produced increases, direct material cost increases in same proportion. Hence, the curve will be straight line going upward to right from Origin.

Cost Graph Four.

This is because, Electricity cost has both elements, variable elements and fixed elements. Hence it curve does not begins from Origin, rather it starts from above even at 0 level of unit produced. As the units produced increase, variable part of electricity cost also increases at same rate.

Cost Graph One

This is because, Straight Line depreciation is a fixed amount. Hence, as the no. of units increases, the per unit depreciation will decrease. Hence, the curve will be downward sloping as show, as the no. of units produced increase.

Cost graph Two

This is because, salary of supervisor is Fixed in nature, hence its curve will be a parallel line to Y axis no matter how many units are produced.

Cost graph Three.
This is because, direct labor cost is variable. If no units are produced, there will be no direct labor cost. As the units produced increases, direct labor cost increases in same proportion. Hence, the curve will be straight line going upward to right from Origin.

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