For each of the following costs, please indicate as mixed or step costs and give your...

For each of the following costs, please indicate as mixed or step costs and give your explanation.

a. Electrical charge for the month

b. Factory overhead

c. Wages if quality control employee who gets paid a bonus for every 10 defects found

d. Charges for an employee development seminar where the cost includes a speaker fee and cost of supplies for each attendee

Expert Solution

a. Electrical charge for the month

It is a mixed cost , that is part fixed & part variable,ie. Certain fixed amount need to be paid even if there is no production activity & variable part varies in direct proportion to electrical consumption .

b. Factory overhead

is a step (fixed )cost--ie.Factory Ohs like utilities & salaries of factory staff do not change until a certain level of activity is exceeded or decreased.It remains fixed irrespective of production levels, upto certain ranges of production --- increases or decreases appreciably only when the production level is notably increased or decreased permanently.

c. Wages of quality control employee who gets paid a bonus for every 10 defects found

is a step(variable) cost---ie. It varies when every 10 units are reached--ie. In steps. Remains constant between 1&10 units ,to increase & again remain constant over the next 11-20 units & so on.

d.Charges for an employee development seminar where the cost includes a speaker fee and cost of supplies for each attendee

Is a fully variable cost --- as the expense(fees & supplies ) is in direct proportion to the no.of speakers/attendees.

ekkarill92 answered 1 year ago

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