Question

The Harbour Town Golf course on Hilton Head Island has many different types of costs. Four such costs are listed below Assume that the cost driver (the activity which causes the cost to be incurred) for each cost is the number of golfers who play the course Also assume that the cost behavior patterns hold over the ranges of number of golfers given below. The costs below are TOTAL costs. NUMBER OF GOLFERS TYPE OF COSTS 20,000 А* $120,000 $120,000 $180,000 $180,000 $230,000 $230,000 82,740 100,470 118,200 113,000 263,000 313,000 413,000 488,000 563,000 72,320 72,320 2,000 8,000 10,000 14,000 17,000 11,820 47,280 59,100 72,320 72,320 72,320 72,320 Required: 1.Identify (in equation form) the cost behavior pattern for each type of cost. Sketch two graphs for each of the 4 types of costs. For each graph the X-axis is the number of golfers. For the first graph the Y-axis is total cost and for the second graph the Y-axis is unit cost. 2. *Type A costs increase at 8,001 units and 14,001 units

Answer 1

TYPE OF COSTS	GOLFERS						TOTAL	PATTERN OF COST
	2000	8000	10000	14000	17000	20000	71000
A	120000	120000	180000	180000	230000	230000	1060000	JUMPING FIXED COST
PER UNIT A	60	15	18	12.85714	13.52941	11.5
B	11820	47280	59100	82740	100470	118200	419610	VARIABLE
PER UNIT B	5.91	5.91	5.91	5.91	5.91	5.91
C	113000	263000	313000	413000	488000	563000	2153000	SEMI VARIABLE
PER UNIT C	56.5	32.875	31.3	29.5	28.70588	28.15
D	72320	72320	72320	72320	72320	72320	433920	FIXED
PER UNIT D	36.16	9.04	7.232	5.165714	4.254118	3.616