Question

Cost Behavior, Classification Smith Concrete Company owns enough ready-mix trucks to deliver up to 102,500 cubic yards of concrete per year (considering each truck's capacity, weather, and distance to each job). Total truck depreciation is $400,000 per year. Raw materials (cement, gravel, and so on) cost about $65 per cubic yard of cement Required: 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. Depreciation cost of truck if it delivers 2,000 cubic yards of concrete in one year. 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. $ Cost of raw materials for 5,000 cubic yards of concrete. Vale ar fixed

Answer 1

y Depreciation cost is fixed cost Therefore, in respective of the amount of cubic yards of concrete delivered by the truck in a . cost of touck will be $400.000. 500,000 400,000 (30,000,400,000 70,000, 400,000) Asopuertomando 300,000 200.000 6 100,000+ 20,500 61000 61.50 82,000 102,500 Cubie yards of cement Depreciatico cost of touck $ 400,000 if it delivers 30,000 cubic Yards of concate in Depreciation cost of truck $400,000 it it delivers 70,000 cubic yards of concrete in one year one year.

@> raw materials cost is variable cost, Cost of daw materials 65 x Amount of cubic yards of cement produced 325.000 (5000,325,000) 260,000 spopardy moe 1 tsp 195.000 130,000 3 65,000 (2000, 130,000) ? 3 5 1000 2000 3000 4000 SOOD Cubic Yards of cement $ 130,000 Cost of raw materials for 2000 cubic Goods of concrete Cost of raw materials for Sooo cubic yards of concrete $ 325,000