MA1 Cost Classification

The valuation department of a large firm of surveyors wishes to develop a method of predicting its total costs in a period. In a period when the firm undertook 420 valuations, the total costs were £82,200 and in a period when the firm undertook 515 valuations, the total costs were £90,275. The total costs for a period could therefore be represented by

• 41,350+(95 x number of valuations in the period)

• 46,500−(85 × number of valuations in the period)

• 42,300−(95 × number of valuations in the period)

• 46,500+(85 x number of valuations in the period)

Costs and output for the Leech factory have the following linear relationship. Y=2,120+6x.

Output for 20X0 is 420 units. What are total costs?

Which two of the following are most likely to be variable?​

• Annual salary of chief accountant.

• Annual salary of factory supervisor.

• Direct materials for production.

• Telephone bill.

• Production line employee's wages.

A cost which contains both fixed and variable components, and so is partly affected by changes in activity level, is known as a ​ (a)  

• semi-variable cost.
• indirect cost.
• direct cost.
• sunk cost

Match the following

• Total Semi-Variable Cost

• 
• Stepped Cost/unit

• 
• Variable Cost/unit

• 
• Fixed Cost/unit

• 

Variable costs are conventionally deemed to ​ (a)   in total when production ​volume ​ (b)  

• vary
• changes
• be constant
• is constant

Organize these options into the right categories

Groups:

(a) Prime Costs

,

(b) Production Overheads

• Office Supplies
• Factory Maintenance

• Royalty fees/unit

• Supervisor's salary

• Raw Materials

• Skilled Worker's Wages

Label the following graphs:

a

b

c

d

Variable Cost/unit

Fixed Cost/unit

Total Variable Costs

Total Mixed Costs

A factory's electricity cost consists of a base charge of $2,000/month plus $0.20/kWh. What is the total electricity cost if 6,000 kWh are consumed?

• $3200

• $3000

• $2200

• $2500

A company incurs a step-fixed cost that increases by $10,000 after every 5,000 units produced, and a variable cost of $1 per unit. If the total cost at 5,000 units is $30,000, what is the total cost at 13,000 units?

• $58000

• $53000

• $63000

• $78000