Question

How can when high volume is over and low volume is under can impact our business?

Also, ABC focuses on the consumption of the resources for that particular activity, can you present some of these related to a company?

Answer 1

Answer)

Here higher volume helps in declining of our fixed costs per units which results in low total costs which helps the company to make more profits or go for less selling price where as low volume results in increase of unit cost due to I I ctease in fixed costs per unit and hence results in less profits due to decrease in price to cost rate.

Here we can take an example for Heritage foods limited an Milk production unit plant allocating the production building costs of bayyavaram plant in India:

Total production building cost:

Rs.1026000 an area of 190000 sq. Feet.

Now the curd production section occupies 84560 sq. Feet and hence cost it got allocated is Rs.456624[i.e rs.1026000×84560/190000]

And milk production section occupies 105440 sq. Feet is Rs.569376[i.e rs 1026000×105440/190000]

This is why I choose is this is the accurate details I have and this is an listed company in India.