Homework SourseEach of Davissons production managers annual salary cost 450
Each of Davisson\'s production managers (annual salary cost, $45,000) can oversee 60,000 machine hours of manufacturing activity. Thus, if the company has 50,000 hours of manufacturing activity, one manager is needed; for 75,000 hours, two managers are needed; for 125,000 hours, three managers are needed; and so forth. Davisson\'s salary cost can best be described as a:
variable cost.
semivariable cost.
step-variable cost.
fixed cost.
step-fixed cost.
| variable cost. | ||
| semivariable cost. | ||
| step-variable cost. | ||
| fixed cost. | ||
| step-fixed cost. |
Solution
Answer
No. of machine hours
No. of managers
Annual Salary per manager
Total Salaries
0 - 60000
1
$45,000
$45,000
60001 - 120000
2
$45,000
$90,000
120001 - 180000
3
$45,000
$135,000
This is a feature of Step Fixed Cost.
| No. of machine hours | No. of managers | Annual Salary per manager | Total Salaries |
| 0 - 60000 | 1 | $45,000 | $45,000 |
| 60001 - 120000 | 2 | $45,000 | $90,000 |
| 120001 - 180000 | 3 | $45,000 | $135,000 |
