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Managerial accounting

Classification of Costs as Fixed or Variable [LO5]

Below are a number of costs that are incurred in a variety of organizations.

Required: Classify each cost as being variable or fixed with respect to the number of units of product or services sold by the organization.

Cost Behavior

1. X-ray film used in the radiology lab at Virginia Mason Hospital in Seattle. __________
2. The costs of advertising a Madonna rock concert in New York City. __________
3. Rental cost of a McDonald's restaurant building in Hong Kong. __________
4. The electrical costs of running a roller coaster at Magic Mountain. __________
5. Property taxes on your local cinema. __________
6. Commissions paid to salespersons at Nordstrom. __________
7. Property insurance on a Coca-Cola bottling plant. __________
8. The costs of synthetic materials used to make Nike running shoes. __________
9. The costs of shipping Panasonic televisions to retail stores. __________
10. The cost of leasing an ultra-scan diagnostic machine at the American
Hospital in Paris. __________

Solution Summary

Managerial accounting is examined.