Mr. Zaid is an experienced cost accounting manager joined Oman Cement Company as a senior cost...

Mr. Zaid is an experienced cost accounting manager joined Oman Cement Company as a senior cost manager. After some days he came to know that the costing system of the company is not appropriate where semi-variable cost is not taken into consideration for cost control, due to which the production cost was too high. Hence he understood that this has to be brought in to notice of top-level managers and hence he prepared a report by taking one semi-variable cost element as an example with proper explanations, numerical examples, and graphical representations so that the top-level managers would understand the importance ofsemi-variable cost.

How Mr. Zaid would have explained the concept to top level managers?

Expert Solution

SEMI-VARIABLE COSTScontains both fixed and variable cost element. By treating a semi variable cost into fixed cost or variable cost results high or low Total cost.If the total cost is wrong it badly affets pricing of product and profitability.So while computing Total cost semi-variable cost must taken rightfully.

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ekkarill92 answered 2 years ago

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