Costs and Special Order

5. Fixed costs can be discretionary or committed. Using your judgment based on the discussion in the case, identify which costs are likely to be discretionary. Assuming that management is able to decrease discretionary fixed costs by 10%, what would be the impact on Bridgestone’s break-even point revenues?

2.) What is the ‘relevant range’ for the cost structure? In other words, at what volume might you expect the fixed and variable costs to change appreciably?

3. Andy is trying to decide which one of two job offers he will accept.

Question 3: Identify all costs associated with this venture. Categorize these costs as fixed or variable.

A more difficult task is identify and planning for variable costs. Variable costs can change from month to month and sometimes cannot be planned for.

1. The objective of the strategic analysis was to identify which products were world-class in terms of “competitive position and potential,” products which could become world-class, and products which have no hope of becoming world-class.

the allocation should be based on the underlying economics of the situation rather than the motives of individuals.

| Within the framework of a break-even analysis, an examination of is conducted to determine the quantity at which the product, with an assumed price, will generate enough revenue to start earning a profit.Answer

Mixed costs consist of a fixed component and a variable component. Understanding the mix of these essentials of a cost, one can predict how costs will change with different levels of activity. As the level of usage of a mixed cost item increases, the fixed component of the cost will not change, while the variable cost component will

To calculate the total costs involved for each of the three options, I have considered only those factors that are not common in all. I have calculated only the excess of cost that might be required to deploy an option.

7. Though numbers given in the cost data can not be contested, I would definitely contest the way total cost has been computed. The item 345 department operates within a large manufacturing facility that churns out number of other products too. Hence judging the profitability of item 345 on the basis of total cost is not practical.

Costs Incurred by Irving Equipment would be that of Investigation along with paying for the Insurance of 214 tonnes of equipment. Depending upon NB

All the costs by a company can be broken into two categories, fixed costs and variable costs. Costs that are independent of output are called fixed costs. Fixed costs remain constant throughout the relevant range and are usually considered sunk for the relevant range. Buildings and machinery are included inputs that cannot be adjusted in the short term. They are only fixed in relation to the quantity of production for a certain time period. The cost of all inputs is variable, in the long run.

o This decision model assumes that variable costs, such as materials and labor, are linear over the relevant range; that is, there are no volume discounts on material, and that addition of more labor does not incur further costs.

Before performing the CVP analysis for the Hampshire manufacturing firm, we identify two basic cost classifications of interest comprising variable costs and fixed costs. As we analyze the case in study, we need to initially acknowledge that both variable costs per