LO.2 (Cost behavior) Mason Company's cost structure contains a number of different cost behavior patterns. Following are descriptions of several di?erent costs; match these to the appropriate graphs. On each graph, the vertical axis represents cost and the horizontal axis represents level of activity or volume.
Identify, by letter, the graph that illustrates each of the following cost behavior pat- terns. Each graph can be used more than once.
1. Cost of raw material, where the cost decreases by $0.06 per unit for each of the ?rst 150 units purchased, after which it remains constant at $2.75 per unit.
2. City water bill, which is computed as follows: ?rst 750,000 gallons or less, $1,000 ?at fee; next 15,000 gallons, $0.002 per gallon used; next 15,000 gallons, $0.005 per gallon used; next 15,000 gallons, $0.008 per gallon used; and so on.
3. Salaries of maintenance workers, assuming one maintenance worker is needed for every 1,000 hours or less of machine time.
4. Electricity rate structure-a ?at ?xed charge of $250 plus a variable cost after 150,000 kilowatt hours are used.
5. Depreciation of equipment using the straight-line method.
6. Rent on a machine that is billed at $1,000 for up to 500 hours of machine time. After 500 hours of machine time, an additional charge of $1 per hour is paid up to a maximum charge of $2,500 per period.
7. Rent on a factory building donated by the county; the agreement provides for a monthly rental of $100,000 less $1 for each labor hour worked in excess of 200,000 hours. However, a minimum rental payment of $20,000 must be made each month.
8. Cost of raw material used.
9. Rent on a factory building donated by the city with an agreement providing for a ?xed-fee payment unless 250,000 labor hours are worked, in which case no rent needs to be paid.