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Use a selected company or your current work environment to identify

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Use a selected company or your current work environment
to identify at least one cost or expense that would fit under
each of the following categories:
Variable
Fixed
Mixed
Step
Would your company be more likely to benefit from using a
manufacturing cost hierarchy or a customer cost hierarchy
for determining cost drivers? Explain your answer and
identify one cost for each of the four cost hierarchy
categories. Present findings in manner that could be
shared with class.
Solution
1
Fixed Costs are expenses that don\'t change based on
production or sales volumes. They include salaries, rent,
insurance, accountancy costs.
2
Variable Costs are expenses that vary based on
production volumes. They include material, labor, utilities,
and delivery costs

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The term mixed costs often refers to the behavior of costs
and expenses. Mixed costs consist of a fixed component
and a variable component.
The annual expense of operating an automobile is a mixed
cost. Some of the expenses are fixed, because they do not
change in total as the number of annual miles change.
Think insurance, parking fees, and some depreciation.
Other expenses are variable, because they will increase
for the year when the miles driven increase (and will
decrease when the miles driven decrease). Think gas, oil,
tires, and some depreciation.
Examples are the rental of a delivery truck, where a fixed
rental fee plus a variable charge based on mileage is
made; and power costs, where the expense consists of a
fixed amount plus a variable charge based on
consumption. A further example is a total factory overhead,
which is a mixture of fixed overhead and variable
overhead.

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Use a selected company or your current work environment to identify at least one cost or expense that would fit under each of the following categories: Variable Fixed Mixed Step Would your company be more likely to benefit from using a manufacturing cost hierarchy or a customer cost hierarchy for determining cost drivers? Explain your answer and identify one cost for each of the four cost hierarchy categories. Present findings in manner that could be shared with class. Solution 1 Fixed Costs are expenses that don \'t change based on production or sales volumes. They include salaries, rent, insurance, accountancy costs. 2 Variable Costs are expenses that vary based on production volumes. They include material, labor, utilities, and delivery costs 3 The term mixed costs often refers to the behavior of costs and expenses. Mixed costs consist of a fixed component and a variable componen ...
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