Question

Using the following data:

Volume	Alpha	Beta	Gamma
2,000	$6,600	$2,400	$8,000
6,000	$9,800	$7,000	$8,000
13,000	$13,000	$12,000	$8,000
20,000	$21,000	$24,000	$8,000

What cost behavior patterns are apparent for Alpha?

a Mixed

b Variable

c Semi Fixed

d Fixed

Answer 1

Alpha is variable cost This cost behavior pattern is called a variable cost. A variable cost describes a cost that varies in total with changes in volume of activity. The activity in this example is the number of bikes produced and sold. However, the activity can take many different forms depending on the organization. The two most common variable costs are direct materials and direct labor. Other examples include indirect materials and energy costs.

Ans: b) variables cost