Identifying Cost Behavior Patterns
Steve Silversmith produces unique and exclusive sterling silver rings, pendants, buckles, and chains. Steve pays one supervisor to oversee the work performed by several part-time silversmiths. He pays each silversmith to work 20 bows per week or 40 hours week, depending on production demand. He also hires a jewelry expert to perform quay assurance inspections and pays her based on the weight (per ounce of silver) of each piece inspected. The controller and the sales manager e discussing potential pace increases due to the increasing cost of silver and increases in other costs. The following are several costs they are discussing:
a.
b. Supervisor salary
c. Packaging (each piece is packaged in a designer carton)
d. Silver
e. Part-time labor (silversmith)
f. Production facility utilities
g. Quality assurance
h. Mortgage on the production facility
Indicate whether each cost is a variable, fixed, step, or mixed cost within Steve’s relevant range of activity.
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Managerial Accounting
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