Identifying Cost Behavior. Zhang Corporation is trying to identify the cost behavior of the three...
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Identifying Cost Behavior. Zhang Corporation is trying to identify the cost behavior of the three costs shown. Cost information is provided for six months. Cost 1 Cost 2 Cost 3 Month Units produced Total costs Cost Total Cost Total Cost per unit costs per unit costs per unit 1 18000 $36000 --=- $19800 ---- $5000 ---- 2 16000 32000 19200 ---- 5000 3 14000 28000 18200 5000 4 12000 24000 16800 ---- 5000 5 10000 20000 14500 ---- 5000 6 8000 16000 ---- 12000 5000 Required: a. Calculate the cost per unit, and then identify how the cost behaves (fixed, variable, or mixed) for each of the three costs. Explain the reasoning behind your answers. b. Why is it important to identify how costs behave with changes in activity
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