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Select the graph (A through L) that best matches the numbered (1 through 7) italicized descriptions of various cost behavior. For each graph, the vertical (y) axis represents total dollars of cost,
and the horizontal (x) axis represents output units during the period. The graphs may be used
more than once.
1. The cost of depreciation. The asset being
letter ______
2. The cost of operating a forklift. The forklift is used to move work-in-process inventory in
groups of 100 units across the factory floor.
letter ______
3. The cost of direct materials. The first 2,000 pounds of direct materials are free because they
are donated by the local city government. After that, the direct materials cost consists of a
per-unit amount that decreases after a threshold of 2,500 total pounds is reached.
letter ______
4. The cost of inspecting finished goods inventory. Each unit is inspected by a quality expert
who is paid the same amount for each unit inspected.
letter ______
5. The cost of product shipping for all output shipped in the period. The shipping cost per unit
decreases with each unit shipped up to a certain number of units, at which time the shipping cost per unit remains constant.
letter ______
6. The cost of compliance with Environmental Protection Agency (EPA) regulations. An electric
car plant manufactures car batteries. Part of the manufacturing process involves the emission of toxic chemicals into the environment, which is regulated by the EPA in the form of a fee assessed on a per-unit manufactured basis. The per-unit cost of complying with
these regulations increases with every fifth battery produced.
letter ______
7. The cost of customer energy consumption. The local electric utility company uses a pricing
system designed to encourage customers to conserve energy usage. Therefore, the rate
per kilowatt-hour that is charged to customers increases with each hour the customer
consumes.
letter ______
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