1. On your own paper, prepare a graph for truck depreciation. Use the vertical axis for cost and the horizontal axis for cubic yards of cement. Select the following amounts from the graph.

Depreciation cost of truck if it delivers 30,000 cubic yards of concrete in one year. $fill in the blank 1

Depreciation cost of truck if it delivers 70,000 cubic yards of concrete in one year. $fill in the blank 2

2. On your own paper, prepare a graph for raw materials. Use the vertical axis for cost and the horizontal axis for cubic yards of cement. Select the following amounts from the graph.

Cost of raw materials for 2,000 cubic yards of concrete. $fill in the blank 3

Cost of raw materials for 5,000 cubic yards of concrete. $fill in the blank 4

3. Assume that the normal operating range for the company is 90,000 to 96,000 cubic yards per year. Classify truck depreciation and raw materials as variable or fixed costs.

Truck depreciation	VariableFixed
Raw materials cost	VariableFixed

4. What action could Smith management take to reduce the truck depreciation cost from year to year.

The cost of truck depreciation could be reduced (or increased) by changing the depreciation method that is used to allocate the cost to each accounting period.The company could manage the depreciation cost by arranging to rent (rather than purchase) additional trucks.Obtain on-site mixing equipment for large jobs (and thus not be responsible for providing the trucks).All of the above.

5. What action could Smith management take to reduce the total raw materials cost from year to year.