BRIEF EXERCISE 1–6 Classification of Costs as Fixed or Variable [ LO6 ]

Below are costs and measures of activity in a variety of organizations.

Required:

Classify each cost as variable or fixed with respect to the indicated measure of activity by placing an X in the appropriate column.

Cost 1. The cost of X-ray film used in the radiology lab at Virginia Mason Hospital in Seattle 2. The cost of advertising a rock concert in New York City 3. The cost of renting retail space for a McDonald's restaurant in Hong Kong 4. The electrical cost of running a roller coaster at Magic Mountain 5. Property taxes paid by your local cinema theater 6. The cost of sales commissions paid to salespersons at a Nordstrom store 7. Property insurance on a Coca-Cola bottling plant 8. The costs of synthetic materials used to make a particular model of running shoe Measure of Activity Number of X-rays taken Number of rock concert tickets sold Total sales at the restaurant Number of times the roller coaster is run Number of tickets sold Total sales at the store Number of cases of bottles produced Number of shoes of that model produced Cost Behavior Variable Fixed