Question

Question 22 Not yet answered Yang Manufacturing, which uses the high-low method, makes a product called Yin. The company incurs three different cost types (A, B, and and has a relevant range of operation between 2,500 units and 10,000 units per month. Per unit costs at two different activity levels for each cost type are presented below. Points out of 10 Type C Total Flag question Type A $4 Type B $9 $4 5,000 units 7,500 units $17 $13 The cost types shown above are identified by behavior as: Type A A. Fixed B. Fixed C. Variable D. Variable E. Semivariable Type B Variable Semivariable Semivariable Fixed Variable Type C Semivariable Variable Fixed Semivariable Fixed Select one: a. Choice A b. Choice B O c. Choice d.Choice D e. Choice

Answer 1

Solution: The answer is d.Choice D ( Variable, Fixed, Semi Variable)

Reason:

1) Type A is variable cost because per unit under 5000 units and 7000 units are one and the same ( $ 4 per unit ). So, It is Variable Cost.

2) Type B is fixed cost because total cost under both options i .e.,

5,000 Units * $ 9 = $ 45,000.

7,500 Units * $ 6 = $ 45,000.

So, Type B is fixed cost.

3) Type C is mixed cost since the total cost is different at each level of activity.

5,000 Units * $ 4 = $ 20,000.

7,500 Units * $ 3 = $ 22,500.

So, Type C is semi variable.

So, Remaining Options are Incorrect.