I. Cost behavior defined

The left column lists several cost classifications. The right column presents short definitions of those costs. In the blank space beside each of the numbers in the right column, write the letter of the cost best described by the definition.

A. Curvilinear cost ___1. This cost increase in direct proportion to increases in volume; its amount is constant for each unit produced.

B. Step-wise cost ___2. This cost remains constant over a limited range of volume; when it reaches the end of its limited range, it changes by a lump sum and remains at that level until it exceeds another limited range.

C. Fixed cost ___3. This cost has a component that remains the same overall volume levels and another component that increases in direct proportion to increases in volume.

D. Mixed cost ___4. This cost increases when volume increases, but the increase is not constant for each unit produced.

E. Variable cost ___5. This cost remains constant overall volume levels within the productive capacity for the planning period.

F. Total cost ___6. This cost is the combined amount of all the other costs.