Question

Moving to another question will save this response. Question 1 When a mixed cost is graphed the Y-intercept corresponds to the step cost. price of the units sold. fixed cost. variable rate. -> Moving to another question will save this response. OSC

Answer 1

Question 1: fixed cost

y intercept is attained when x is zero that means when units sold is zero. When units sold is zero no variable cost exists. But the fixed cost will be there even if the units sold is zero, that means y intercept corresponds to the fixed cost.

Question 2 :All of these are correct

Manufacturer's work is to produce goods using raw materials and when goods are manufactured, at the end of the year all units need not be manufactured completely (finished goods). That means he will have semi finished goods in hand on the last day of the year i.e. work in progress. So he will have raw materials, work in progress and finished goods in his business balance sheet.

Answer : $25160

Because, electricity is derived based on number of machine hours. So, number of machine hours are independent where as the cost is dependent. While using high low method, highest and lowest cost amounts are considered, therefore the lowest electricity cost in the question $25160 is used as shown below

Variable cost = (higher cost - lower cost) /(higher activity - lower activity).

= ($27950 - $25160)/(5430 - 4500) machine hours

= $2790/930 machine hours

= $3 per machine hour.

Fixed cost = lower activity total cost - lower activity total variable cost.

= $25160 - ($3×4500)

= $25160 - $13500

= $11660

Answer : leasing costs.

Discretionary fixed cost can be reduced or eliminated at the discretion of management. Lease cost needs to be by management as committed. So it is not a discretionary fixed cost