Briefly describe variable, fixed, mixed, and step costs, and indicate how the total cost function of...

Briefly describe variable, fixed, mixed, and step costs, and indicate how the total cost function of each changes as activity increases within a time period. Give 3 examples of each type of cost (only one example of step costs

Solutions

Expert Solution

Variable costs change in total in direct proportion to changes in activity or can say changes in production units.

Fixed costs do not change in response to a change in activity or can say change in units. It remains fixed for the period and hence also said period cost.

Mixed costs (sometimes called semi-variable costs) contain both the fixed and a variable cost elements.

Step costs are constant within a narrow range of activity but shift to a higher level when activity exceeds the range.

The total cost function of most organizations has shifted in recent years toward more fixed costs and fewer variable costs, making it increasingly important for organizations to manage their fixed costs.

Examples: Variable Costs = Material , Labour and Overhead
Fixed Costs = Depreciation, Salaries, Rent etc.
Mixed Costs = Expense of operating an automobile, Machine Setup Cost, Utilities Cost
Step Cost = A company can make 1000 units of product in a 8 hrs shift. If the company recieves another order then it must add another shift, which requires additional cost of shift manager. The cost of shift manager is Step Cost.

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Identify if the following cost are usually variable, fixed, mixed, or step costs (large steps), step...

Identify if the following cost are usually variable, fixed, mixed, or step costs (large steps), step costs (narrow steps) - Electricity cost, which includes a $15 per month billing charge and an additional amount depending on the number of KW used. - A computer service agreement in which a company pays $150 per hour of technical time. -The wages of counter help in a fast food restaurant. - - The cost of computer printers and copiers in your university. -...

Explain step costs and mixed costs. Is it possible to classify these as variable or fixed?...

Explain step costs and mixed costs. Is it possible to classify these as variable or fixed? Is it possible for a particular cost to be classified as variable in one decision making situation and fixed in another situation? Explain.

What is the meaning of step-variable cost, step-fixed cost, semi-variable (or mixed) cost, and curvilinear cost?...

What is the meaning of step-variable cost, step-fixed cost, semi-variable (or mixed) cost, and curvilinear cost? Can you explain with one example?

Describe the concept of cost behavior and the differences between fixed, variable, and mixed costs. Differentiate...

Describe the concept of cost behavior and the differences between fixed, variable, and mixed costs. Differentiate product costs from period costs and direct costs from indirect costs. Compare the different types of income statements and the purposes of each. Please explain to the best of your knowledge one or more of the following: 1- Product Cost . 2- Period Cost.. 3- Opportunity Cost 4- Sunk Cost 5- Shut -down Costs 6- Applied manufacturing overhead.

No. of Products Total Variable Costs, $ Total Costs $ Average Fixed Cost $ Average Variable...

No. of Products Total Variable Costs, $ Total Costs $ Average Fixed Cost $ Average Variable Cost $ Average Total Cost $ Marginal Cost$ 0 0 1 12 2 20 3 24 4 27 5 40 6 65 7 98 Assume that the fixed cost is $80, calculate the above costs in the table and explain the difference between average total costs and marginal costs. In a graph illustrate the Average Total Cost and Marginal Cost Curves, explain their relationship....

In applying the high-low method of cost estimation to mixed costs, how is the total fixed...

In applying the high-low method of cost estimation to mixed costs, how is the total fixed cost estimated? If fixed costs increase, what would be the impact on the (a) contribution margin? (b) income from operations? An examination of the accounting records of Clowney Company disclosed a high contribution margin ratio and production at a level below maximum capacity. Based on this information, suggest a likely means of improving income from operations. Explain.

Variable, Fixed, and Mixed Costs Classify the following costs of activity inputs as variable, fixed, or...

Variable, Fixed, and Mixed Costs Classify the following costs of activity inputs as variable, fixed, or mixed. Identify the activity and the associated activity driver that allow you to define the cost behavior. For example, assume that the resource input is “cloth in a shirt." The activity would be "sewing shirts," the cost behavior "variable," and the activity driver "units produced." Prepare your answers in the following format: Activity Cost Behavior Activity Driver a. Flu vaccine Assembling Delivering orders Filing...

2. Describe a fixed cost, variable cost. Explain why the variable and fixed costs are important...

2. Describe a fixed cost, variable cost. Explain why the variable and fixed costs are important in cost accounting. Give your opinion

1.The different aspects of variable costs, fixed costs, and mixed costs. (Consider how they behave in...

1.The different aspects of variable costs, fixed costs, and mixed costs. (Consider how they behave in regards to both total costs and unit costs.) 2.Discuss their behavior in regards to the relevant range. Please write a paragraph for each so I can understand a little better.

For each of the following costs, please indicate as mixed or step costs and give your...

For each of the following costs, please indicate as mixed or step costs and give your explanation. a. Electrical charge for the month b. Factory overhead c. Wages if quality control employee who gets paid a bonus for every 10 defects found d. Charges for an employee development seminar where the cost includes a speaker fee and cost of supplies for each attendee

Subjects