Question

Listed here are four series of separate costs measured at various volume levels. Examine each series and identify whether it is best described as a fixed, variable, step-wise, or curvilinear cost. (It can help to graph each cost series.)

Volume (units)	Series 1	Series 2	Series 3	Series 4
0	\(0	\)450	\(800	\)100
100	800	450	800	105
200	1,600	450	800	120
300	2,400	450	1,600	145
400	3,200	450	1,600	190
500	4,000	450	2,400	250
600	4,800	450	2,400	320

Short answer

Answer

Series 1: Variable cost

Series 2: Fixed Cost

Series 3: Stepwise cost

Series 4: Curvilinear cost

Step-by-step solution

Step-By-Step SolutionStep 1: Definition of Cost Behavior

How the cost incurred by the business entity will change due to a change in the level of activity attained by the business entity is known as cost behavior.

Classification of cost

Variable cost: The cost that increases or decreases with the change in the level of units is known as a variable cost.

Fixed cost: The cost that would not change due to changes in the level of output produced by the business entity is termed a fixed cost.

Stepwise cost: The cost remains the same up to the relevant output range and changes when the output level goes beyond the relevant range, known as stepwise cost.

Curvilinear cost: The cost that increases as the level of output increases is known as curvilinear cost. This cost does not increase at a constant rate according to an increase in output.