Question

Select the graph that matches the numbered manufacturing cost data. Indicate by letter which of the graphs best fits each of the situations or items described.
The vertical axes of the graphs represent total dollars of cost, and the horizontal axes represent production output during a calendar year. In each case, the zero point of dollars and production is at the intersection of the two axes. The graphs may be used more than once.
1. Annual amortization of equipment, where the amount of amortization charged is computed by the machine-hours method.
2. Electricity bill—a flat fixed charge, plus a variable cost after a certain number of kilowatt- hours are used, where the quantity of kilowatt-hours used varies proportionately with quantity of production output.
3. City water bill, which is computed as follows:
First 1,000,000 litres or less ...... $1,000 flat fee
Next 10,000 litres ........ $0,003 per litre used
Next 10,000 litres ........ $0,006 per litre used
Next 10,000 litres ........ $0,009 per litre used
And so on ........ And so on
The litres of water used vary proportionately with the quantity of production output.
4. Cost of lubricant for machines, where cost per unit decreases with each kilogram of lubricant used (for example, if one kilogram is used, the cost is $10; if two kilograms are used, the cost is $19.98; if three kilograms are used, the cost is $29.94) with a minimum cost per kilogram of $9.20.
5. Annual amortization of equipment, where the amount is computed by the straight-line method. When the amortization rate was established, it was anticipated that the obsolescence factor would be greater than the wear-and-tear factor.
6. Rent on a manufacturing plant donated by the city, where the agreement calls for a fixed fee payment unless 200,000 labour-hours are worked, in which case no rent need be paid.
7. $alaries of repair personnel, where one person is needed for every 1,000 machine-hours or less (that is, 0 to 1,000 hours requires one person, 1,001 to 2,000 hours requires two people, etc.).
8. Cost of direct materials used (assume no quantity discounts).
9. Rent on a manufacturing plant donated by the county, where the agreement calls for rent of $100,000 reduced by $1 for each direct manufacturing labour-hour worked in excess of 200,000 hours, but a minimum rental fee of $20,000 must be paid.


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  • CreatedJuly 31, 2015
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