Question

Following are five series of costs A through E measured at various volume levels. Identify each series as either fixed, variable, mixed, step-wise, or curvilinear.
Volume (Units) Series A Series B Series C Series D Series E 0 $ 0 $ 2,400 $ 6,400 $ 0 $ 3,200 400 6,700 2,400 6,400 4,160 3,800 800 7,370 3,400 6,400 8,320 4,400 1,200 8,040 3,400 6,400 12,480 5,000 1,600 9,157 4,400 6,400 16,640 5,600 2,000 10,720 4,400 6,400 20,800 6,200 2,400 15,075 5,400 6,400 24,960 6,800

Answer 1

Answer:

Series         Nature

Series A      Curvilinear

Series B      Step-wise

Series C      Fixed

Series D      Variable

Series E      Mixed

Explanation:

a) Data and Analysis:

Volume (Units)  Series A   Series B   Series C   Series D   Series E

        0                  $ 0         $ 2,400    $ 6,400     $ 0          $ 3,200

   400                  6,700         2,400       6,400       4,160        3,800

   800                  7,370         3,400        6,400      8,320        4,400

1,200                  8,040         3,400        6,400     12,480       5,000

1,600                  9,157          4,400        6,400     16,640       5,600

2,000                10,720         4,400        6,400    20,800       6,200

2,400                15,075         5,400        6,400    24,960       6,800

b) Further Explanation:

Fixed cost: Series C costs remain fixed no matter the quantity produced.

Variable cost: Series D costs are completely variable, with a unit variable cost of $10.40.

Mixed cost: Series E costs are mixed, with a fixed cost of $3,200 and a variable cost per unit of $1.50.

Step-wise cost: Series B costs increase like a staircase.   They remain fixed within a relevant range but increase after the range is exceeded.

Curvilinear cost: Series A costs are curvilinear or nonlinear, and increases irregularly or inconsistently as the total output increases.