Question

Listed here are four series of separate costs measured at various volume levels Volume (Units) Series 1 Series 2 Series 3 Series 4 450 $ 450 450 450 450 450 450 800 800 800 1,600 1,600 2,400 2,400 100 105 120 145 190 250 320 100 200 300 400 500 600 800 1,600 2,400 3,200 4,000 4,800 Examine each series and identify whether it is best described as a fixed, variable, step-wise, or curvilinear cost. (lt can help to graph the cost series.) Series 1 Series 2 Series 3 Series 4

Answer 1

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Volume	Series 1	Series 2	Series 3	Series 4
0	0	450	800	100
100	800	450	800	105
200	1,600	450	800	120
300	2,400	450	1,600	145
400	3,200	450	1,600	190
500	4,000	450	2,400	250
600	4,800	450	2,400	320
Series 1 is changing in exact proportion with volume. So it is a variable cost.
Series 2 is constant irrespective of volume. So it is a Fixed cost.
Series 3 is changing after increase in volume by every 200 units. It is a Step-wise cost. A step cost is a cost that does not change steadily with changes in activity volume, but rather at discrete points.
A step cost is a fixed cost within certain boundaries, outside of which it will change
Series 4 is changing at an uneven and irregular rate. There is no way a relation can be established between Series 4 cost and volume. So this is a Curvilinear cost. A curvilinear cost, is an expense that increases at an inconsistent rate
as production volume increases. This is an irregular cost that increases at different rates as total output increases.
Astro Co.
Ans 1	2017			Ans 2	2018			Ans 3	2018			Ans 4	2018
Units sold	20,100.00	A		Variable costs per unit	16.92	K=J*60%		Units sold	20,100.00	A		Target Income	210,000.00	S
Sales	755,760.00	B		Sell price per unit	37.60	H		Sell price per unit	37.60	H		Total Fixed costs	403,500.00	N
Variable costs	566,820.00	C		Contribution per unit	20.68	L=H-K		Variable costs per unit	16.92	K		Target Contribution	613,500.00	T=S+N
Contribution Margin	188,940.00	D=B-C		Fixed costs	252,500.00	F		Contribution per unit	20.68	L		Contribution per unit	20.68	L
Contribution per unit	9.40	E=D/A		Additional	151,000.00	M		Contribution Margin	415,668.00	Q=L*A		Sales Units	29,666.34	U=T/L
Fixed costs	252,500.00	F		Total Fixed costs	403,500.00	N=F+M		Total Fixed costs	403,500.00	N		Sell price per unit	37.60	H
Breakeven unit	26,861.70	G=F/E		Breakeven unit	19,511.61	O=N/L		Net Profit	12,168.00	R=Q-N		Sales Value	1,115,454.55	V=U*H
Sell price per unit	37.60	H=B/A		Breakeven value	733,636.36	P=O*H
Breakeven value	1,010,000.00	I=G*H
Variable costs per unit	28.20	J=C/A