Question

In: Accounting

Which of the following costs can show a change in the cost per unit for each...

Which of the following costs can show a change in the cost per unit for each additional unit produced.

Semivariable cost.

Curvilinear cost.

Step-fixed cost.

Step-variable cost.

Fixed cost.

Solutions

Expert Solution

  • Semi-variable cost: These are cost that have characteristics of both the cost – fixed cost and variable cost. Part of the cost is FIXED and part of it is VARIABLE.

Example: Sales manager Salary = $200 per month + $2 per unit Sold.
Sales manager’s salary will increase with every additional unit sold.

Hence, Semi-Variable Cost will show a change in the cost per unit for each additional unit.

  • Curvilinear cost: These are the cost that varies at an ‘inconsistent’ rate. They increase with the increase in production but they vary at an inconsistent manner.

Since, the cost increases when production increases, this will also show a change in the cost per unit for each additional unit.

  • Step-fixed cost: These are the cost that stays FIXED up to a limit, but if the production has to be increased in excess of that ‘level’ additional fixed cost will have to be incurred.

For example, 5000 units can be produced by a company and fixed cost is $10,000. Company receives an order to produce additional 2000 units and requires purchasing of additional equipment at cost $ 5000. Hence, after 5000 units fixed cost increased to $ 15000.

Since Step Fixed cost changes after exceeding a given level of activity, it WILL NOT SHOW a change in the cost per unit for each additional unit.

  • Step-variable cost: Step variable cost also changes after attaining a given level of activity but they are variable in nature.

Hence, Step variable cost also show a change in the cost per unit for each additional unit.

  • Fixed cost: These do not change and remains the same. When the production increase, Fixed cost per increases.

Hence, Fixed Cost will show a change in the cost per unit for each additional unit.

Example:

A

Fixed Cost

$           10,000.00

$                     10,000.00

$            10,000.00

$                 10,000.00

$          10,000.00

$          10,000.00

B

Units produced

5

6

7

8

9

10

C=A/B

Fixed Cost per unit [Decreasing as the unit increases]

$             2,000.00

$                       1,666.67

$              1,428.57

$                   1,250.00

$            1,111.11

$            1,000.00

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

Which of the following is a mixed cost? a) a cost that is $32.00 per unit...
Which of the following is a mixed cost? a) a cost that is $32.00 per unit when production is 80,000 and $40.00 per unit when production is 128,000. b) a cost that is $64.00 per unit when production is 80,000 and $64.00 per unit when production is 128,000. c) a cost that is $32.00 per unit when production is 80,000 and $32,000 per unit when production is 128,000. d) a cost that is $32.00 per unit when prodcution is 80,000...
4. If a product can be sold for $850 per unit, the variable cost per unit...
4. If a product can be sold for $850 per unit, the variable cost per unit is $380 and the fixed costs are $2,350,000, how many units must be produced and sold to achieve the breakeven? Show your calculations. (1 point)
Bob makes widgets. Variable costs per unit are $2. Fixed cost per unit (at an output...
Bob makes widgets. Variable costs per unit are $2. Fixed cost per unit (at an output level of 100) are $1 per unit. The normal sales price per unit is $5. A customer approaches Bob offering to buy 40 widgets for $4 each. Assume Bob has excess capacity. 1) What is the effect on operating income if he accepts the order? Additional revenue – additional cost = effect on oper. income. Fixed costs won’t change so additional costs = VC...
show the fixed cost are fixed in total but is variable on a per unit basis...
show the fixed cost are fixed in total but is variable on a per unit basis and that variable in total but is fixed on a per unit basis
As the activity level increases, which of the following will decrease? A. Variable cost per unit...
As the activity level increases, which of the following will decrease? A. Variable cost per unit B. Fixed cost in total C. Fixed cost per unit D. Variable cost in total
Determine the estimated total cost and cost per unit of each product
Hannah Ortega is considering expanding her business. She plans to hire a salesperson to cover trade shows. Because of compensation, travel expenses, and booth rental, fixed costs for a trade show are expected to be $15,680. The booth will be open 32 hours during the trade show. Ms. Ortega also plans to add a new product line, ProOffice, which will cost $188 per package. She will continue to sell the existing product, EZRecords, which costs $108 per package. Ms. Ortega...
Find estimated total cost and cost per unit of each product
Hannah Ortega is considering expanding her business. She plans to hire a salesperson to cover trade shows. Because of compensation, travel expenses, and booth rental, fixed costs for a trade show are expected to be $7,500. The booth will be open 30 hours during the trade show. Ms. Ortega also plans to add a new product line, ProOffice, which will cost $150 per package. She will continue to sell the existing product, EZRecords, which costs $100 per package. Ms. Ortega...
Given the following information: Selling Price (per unit): $10,000 Variable Costs (per unit): $7,000 Fixed Costs:...
Given the following information: Selling Price (per unit): $10,000 Variable Costs (per unit): $7,000 Fixed Costs: $200,000 Required Each of these are separate situations: What is the break-even point in total sales in dollars? How many units need to be sold to make a profit of $20,000? How many units need to be sold to make a profit of $20,000 if fixed costs increase from $200,000 to $250,000? How many units would they need to sell if they wanted to...
Given the following information: Selling Price (per unit): $10,000 Variable Costs (per unit): $7,000 Fixed Costs:...
Given the following information: Selling Price (per unit): $10,000 Variable Costs (per unit): $7,000 Fixed Costs: $200,000 Required Each of these are separate situations: What is the break-even point in total sales in dollars? How many units need to be sold to make a profit of $20,000? How many units need to be sold to make a profit of $20,000 if fixed costs increase from $200,000 to $250,000? How many units would they need to sell if they wanted to...
Modern Artifacts can produce keepsakes that will be sold for $130 each. Nondepreciation fixed costs are $1,600 per year, and variable costs are $80 per unit.
Modern Artifacts can produce keepsakes that will be sold for $130 each. Nondepreciation fixed costs are $1,600 per year, and variable costs are $80 per unit. The initial investment of $4,800 will be depreciated straight-line over its useful life of 6 years to a final value of zero, and the discount rate is 13%. a. What is the degree of operating leverage of Modern Artifacts when sales are $7,020? (Do not round intermediate calculations. Round your answer to 2 decimal places.)...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT