Exercises: Set A 27. Identifying Cost Behavior. Mining, Inc., is trying to identify the cost behavior of the three costs shown. Cost information is provided for six months. Cost 1 Cost 2 Cost 3 Units Total Cost per Total Cost per Total Cost per Month Produced Costs Unit Costs Unit Costs Unit 1 8,000 $10,000 $24,000 $32,000 2 10,000 10,000 29,000 40,000 3 12,000 10,000 33,600 48,000 4 14,000 10,000 36,400 56,000 5 16,000 10,000 38,400 64,000 6 18,000 10,000 39,600 72,000 Required: a. Calculate the cost per unit, and then identify how the cost behaves (fixed, variable, or mixed) for each of the three costs. Explain the reasoning behind your answers. b. Why is it important to identify how costs behave with changes in activity?

Exercises: Set A 27. Identifying Cost Behavior. Mining, Inc., is trying to identify the cost behavior of the three costs shown. Cost information is provided for six months. Cost 1 Cost 2 Cost 3 Units Total Cost per Total Cost per Total Cost per Month Produced Costs Unit Costs Unit Costs Unit 1 8,000 $10,000 $24,000 $32,000 2 10,000 10,000 29,000 40,000 3 12,000 10,000 33,600 48,000 4 14,000 10,000 36,400 56,000 5 16,000 10,000 38,400 64,000 6 18,000 10,000 39,600 72,000 Required: a. Calculate the cost per unit, and then identify how the cost behaves (fixed, variable, or mixed) for each of the three costs. Explain the reasoning behind your answers. b. Why is it important to identify how costs behave with changes in activity?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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1. COMPUTE THE UNIT PRODUCT COST UNDER ABSORPTION COSTING 2. COMPUTE THE UNIT PRODUCT COST UNDER VARIABLE COSTING
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