Question

Acme Manufacturing recently added another shift, which required the company to hire another production supervisor. The supervisor's salary would be considered a_______________.

Answer 1

Answer:

The correct answer is step-wise cost.

Explanation:

Step-wise cost is a cost type that remains fixed over a relevant range of output but changes in a step when output goes beyond that level of output.

The change noticed could be either be an increase or decrease depending on the nature of the cost itself.

In this instance,the supervisor's salary initially remains fixed regardless of the level output if original shift remains the same, but changes by additional salary of a new supervisor when the new shift commences.

Answer 2

Answer:

Step-wise cost.

Explanation:

Step-wise cost is also referred to as stair-step cost. It is defined as an expense that occurs during production of goods and changes in lump sum when there is an increase or decrease in production. That is for a particular production level the expense is fixed, when production changes the expense changes along with it.

If a company is introducing a new shift they are increasing production.

The salary of the shift manager is a lump sum that is paid when the new shift is implemented, therefore it is a step-wise cost.