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# Determining How Costs Behave

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Determining How Costs Behave Objective 1) A cost function is a ________. A) process of calculating present value of projected cash flows B) process of allocating costs to cost centers or cost objects C) mathematical description of how a cost changes with changes in the level of an activity relating to that cost D) is a very thorough and detailed way to identifying a cost object when there is a physical relationship between inputs and outputs 2) Bennet Company employs 20 individuals. Eighteen employees are paid \$18 per hour and the rest are salaried employees paid \$3,000 a month. Which of the following is the total cost function of personnel? A) y = a + bX B) y = b C) y = bX D) y = a 3) Crimson Services, Inc., employs 8 individuals. They are all paid \$16.50 per hour. How would total costs of personnel be classified? A) variable cost B) mixed cost C) irrelevant cost D) fixed cost 4) For February, the cost components of a picture frame include \$0.30 for the glass, \$0.75 for the wooden frame, and \$0.80 for assembly. The assembly desk and tools cost \$500. Two hundred fifty frames are expected to be produced in the coming year. What cost function best represents these costs? A) y = 1.85 + 500X B) y = 500 + 1.85X C) y = 3.85 + 600X D) y = 1.05 + 500X 5) The cost components of a heater include \$30 for the compressor, \$10 for the sheet molded compound frame, and \$75 per unit for assembly. The factory machines and tools cost is \$60,000. The company expects to produce 1,000 heaters in the coming year. What cost function best represents these costs? A) y = 60,000 + 115X B) y = 1,000 + 60,000X C) y = 60,000 + 1,000X D) y = 1,000 + 115X Business Management Assignment Help, Business Management Homework help, Business Management Study Help, Business Management Course Help

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