Posted: May 4th, 2016

Write the equation to predict estimated total lease cost?

Given the attached list of fixed, variable, and semi variable costs, please help me explore the possibility of altering the cost behavior of two cost components. I need to come up with a way to change a variable cost to a fixed cost, or a fixed to variable, semi to fixed. I need two examples. Please help me understand the pros and cons of altering this cost behavior of these cost components.

For example, Advertising is listed as a “variable” cost. If the company chose to outsource advertising, lets say a 5 year contract at 100k per year, this would change to a fixed cost. What would be the pros and cons?

Your company leases a copier. The contract states you must pay the leasing company $3,000 a year and $.005 per copy.

Required:

A) Write the equation to predict estimated total lease cost.
B) compute the estimated total costs if:
I. 10,000 copies are made
ii. 50,000 copies are made

C) compute the estimated cost per unit if:
I. 10,000 copies are made
ii. 50,000 copies are made