1. In the table below, Have-A-Seat Inc. has outlined many of the costs associated with producing office chairs. With respect to the production and sale of office chairs, classify each cost as: a.fixed b.mixed c.variable. a. Pressure-molded plastic for chair frames b. Pension cost: $0.50 per employee hour on the job c. Insurance premiums for inventory: $2,100 per month plus $0.01 for each dollar of inventory over $2 million d. Property taxes: $120,000 per year for the factory building and land 2. Variable costs per unit __________ with changes in the level of activity, while fixed costs per unit ___________ as the number of units increases and __________ as the number of units decreases. Options: a. Increase, b. decrease, c. stay the same
Mastery Problem: Contribution Margin, Cost-Volume-Profit Analysis and Break-Even Point (Overview)
An appreciation of cost behavior is needed in order for management to understand and predict profitability as the costs of material, labor and other operating expenses and levels of production and sales change. It's important to review the cost behavior of fixed, variable and mixed costs before contribution margins, cost-volume-profit analysis, and break-even points.
1. In the table below, Have-A-Seat Inc. has outlined many of the costs associated with producing office chairs. With respect to the production and sale of office chairs, classify each cost as:
a.fixed
b.mixed
c.variable.
| a. Pressure-molded plastic for chair frames | |
| b. Pension cost: $0.50 per employee hour on the job | |
| c. Insurance premiums for inventory: $2,100 per month plus $0.01 for each dollar of inventory over $2 million | |
| d. Property taxes: $120,000 per year for the factory building and land |
2. Variable costs per unit __________ with changes in the level of activity, while fixed costs per unit ___________ as the number of units increases and __________ as the number of units decreases.
Options: a. Increase, b. decrease, c. stay the same
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
