Question

Cost Patterns The following graph depicts cost-volume relationships for Tallmadge Company: Dollars 0 Volume Choose a labeled point or line on the graph that best represents the behavior of each of the following items as operating volume is increased. Answers may be the same for more than one item. Answer each item independently (Select the appropriate point or line by using the drop-down answer box found at the end of each item.) a. Total sales revenue. b. Total costs C. Total variable costs. d. Total fixed costs. e. Total mixed cost. f. Break-even point. A& B +

Answer 1

a) Total Sales Revenue = DE

b) Total Costs = CF

c) Total Variable Costs =FCG

d) Total Fixed Costs = CG

e) Total mixed Costs = CF

f) Break Even Point = B is break even volume and A is the break even revenue

Explanations:-

a) Total sales revenue curve starts from zero point to E which

b) Total cost curve contains both Variable and Fixed costs

c) Total Variable cost is the part of totals sales deducted by total fixed cost part.

d) Total Fixed cost is the straight line CG. Because it wont change with change in sales volume or revenue.

e) Total Mixed cost is the combination of Variable cost and fixed cost i.e:-

Total Variable cost = FCG and Total Fixed cost = CF so Total mixed cost curve is nothing but total cost i.e CF.

f) Break Even Point is the point where total cost equals revenue, i.e point A for revenue Break Even point and at the same time B for Quantity Break Even Point. (A&B)