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3-B1 Identifying Cost Behavior Patterns

3-B1 Identifying Cost Behavior Patterns
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3-B1 Identifying Cost Behavior Patterns
At a seminar, a cost accountant spoke on identification of different kinds of cost behavior. Tammy Li, a hospital administrator who heard the lecture, identified several hospital costs of concern to her. After her classification, Li presented you with the following list of costs and asked you to (1) classify their behavior as one of the following: variable, step, mixed, discretionary fixed, committed fixed, and (2) to identify a likely cost driver for each variable or mixed cost.
1. Operating costs of X-ray equipment ($95,000 a year plus $3 per film)
2. Health insurance for all full-time employees
3. Costs incurred by Dr. Rath in cancer research
4. Repairs made on hospital furniture
5. Training costs of an administrative resident
6. Straight-line depreciation of operating room equipment
7. Costs of services of King Hospital Consulting
8. Nursing supervisors’ salaries (a supervisor is needed for each 45 nursing personnel)



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