‘Outside of the relevant range, cost behaviour patterns may not hold.’ Explain this statement

1. Assuming energy is semi-variable cost, classify each of the above cost items (i.e., ‘a’ to ‘f’) according to their cost behaviour as variable, step-variable, committed fixed, discretionary fixed, step-fixed, or semi-variable. Show the necessary computations to support your answer. 6 Marks

2. Calculate the estimated (i) total production cost and (ii) product cost per unit for 2017 assuming total production amounted to 50,000 units. 10 Marks

3. Calculate the number of units that the company should produce and sell in order to breakeven during 2017. Assume the sales price per unit is $140. 12 Marks

4. ‘Outside of the relevant range, cost behaviour patterns may not hold.’ Explain what this statement means and support your answer with one example for variable costs and one example for fixed costs. (Hence: this part requires proper referencing when published resources are used so as to avoid plagiarism.)