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# Principles of Accounting and Types of Cost

40. The graph below depicts two different types of costs. Questions related to the graph should be answered in the spaces provided.

a. The line H-B represents what type of cost? Variable cost
b. Production at point J versus point L would increase total variable costs.
Variable costs will vary with the number of production units. If the units of output is higher, the total variable costs will also get higher.
c. Production at point J versus point L would decrease per unit fixed costs.
Fixed cost will remain the same for a certain units of output within the range. However, the per unit fixed costs will be decreased if the units of output is higher.
d. What is a possible reason that line G-A increases at point A to a new horizontal line?
The factory will need more machinery and facilities to produce more units of output, resulting in higher fixed costs.
e. What kind of cost is depicted by the line from point G to point A? Fixed cost

#### Solution Preview

40. The graph below depicts two different types of costs. Questions related to the graph should be answered in the spaces provided.

a. The line H-B represents what type of cost? Variable cost
b. Production at point J versus point ...

#### Solution Summary

This solution is comprised of a detailed explanation to answer and fill in the spaces provided.

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