Answered: decrease in variable cost

Business

Accounting

decrease in variable cost

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter8: Standard Costs And Variances

Section: Chapter Questions

Problem 15Q: What causes the variable overhead efficiency variance?

See similar textbooks

Related questions

Q: How does the variable cost per unit change as the level of activity (or cost driver) increases? Why?

A: A variable cost changes is directly proportional to the change in the level of activity or cost…

Q: When should a segment be dropped? only when the decrease in total contribution margin is less…

Q: Which of the following statements about margin of safety is false? O a. If only the fixed costs…

A: This option is False A. If only the fixed cost decreases but the number of units sold and unit…

Q: Variable cost varies _____ with output. a. Disproportionately b. Proportionately c. More than…

A: The different costs of production are classified as fixed costs and variable costs. The fixed cost…

Q: Which of the following is called minimum point of production at which total cost is recovered:…

A: The margin of safety sales is calculated as difference between current sales and break even sales.

Q: What is the effect of an increase in activity on the followingitems?a. Total variable costs.b.…

A: Cost behavior: Cost behavior is the relationship between cost and activity and it is relevant to the…

Q: Which of the following is NOT true of variable costing? a. Profits may increase though sales…

A: Variable costing is a concept used in managerial and cost accounting in which the fixed…

Q: When units produced are less than units sold, how does operating income differ between variable…

A: Absorption Costing: "Absorption costing is a method that allocates "direct labor, direct materials,…

Q: What effect does an increase in volume have on—b. Unit variable costs?

A: Variable cost: Variable costs are the total costs that changes with the change in level of activity.…

Q: The increase/decrease in variable cost from existing level to the new level is called as __cost. a.…

A: Variable cost tends to increase or decrease with increased or decreased volume of production whereas…

Q: Which of the following is NOT a use of CVP (Cost-Volume-Profit) analysis? a.what is the impact on…

A: SOLUTION- CVP ANALYSIS IS USED TO DETERMINE HOW CHANGES IN COSTS AND VOLUME EFFECTS A COMPANY'S…

Q: Which of the following statements about margin of safety is false? a. Margin of safety measures the…

A: margin of safety is that much sales is above the break even point sales.

Q: Give an example of how a manager can decrease variable costs while increasing fixed costs?

A: Variable Cost: Variable costs are costs which are directly vary with the change in production.…

Q: Break-even value using the contribution margin ratio

A: (Since you have posted a multi-part question, we will solve the first three parts for you. For the…

Q: Which of the following statements about margin of safety is false? O a. If only the fixed costs…

A: The Margin of Safety is the difference between the Budgeted Revenues and Breakeven Revenues.…

Q: true or false, An increase in total fixed costs lowers the break-even point.

A: Formula: Break even point = Fixed costs / Contribution margin per unit. Contribution margin per unit…

Q: Calculate: a) The break-even level of production and sales b) The margin of safety

A: Given in the question: Per Desk Amount Direct Materials €3.00 Direct Labour…

Q: Fixed cost per unit of output decreases as volume increases. True or False True False

A: Any organization generally have two types of expenses - Fixed costs and variable costs. Fixed costs…

Q: When variable costs increase and all other variables remain unchanged, the break-even point will:…

A: Variable Cost refers to those Cost which are Variable on nature that means they are changed with the…

Q: When output volume increases, do variable costs per unit increase, decrease, or stay the same within…

A: Variable costs: These are the costs that proportionately change with the changes in the activity…

Q: Why is absorption costing the method allowable for GAAP yet managers prefer variable costing

A: In variable costing only variable costs are included in the product cost. Fixed costs re considered…

Q: To increase margin of safety, the following measures can be taken O a. Increase the output O b.…

A: The margin of safety is the excess of current sales over break even sales.

Q: How would an Increase in total fixed costs affect the break-even point and the margin of safety?

A: The break even sales are the sales where business earns no profit no loss during the period.

Q: when the contribution margin ratio increases

A: Option A is wrong because break-even point decreases when the contribution margin ratio increases.…

Q: A decrease in production will result in an increase in Total Variable Cost True False

A: Solution: Decrease in production will result in decrease in variable cost because variable cost per…

Q: Which of the following statements about margin of safety is false? O a. If the variable cost per…

A: Margin of safety is calculated as excess of current sales revenue over break even sales.

Q: how would an increase in selling price per unit affect the break-even point and the margin of…

A: Break even point is the point where the entity is earning no profit and loss. Its contribution does…

Q: Is this statement true or false? Can you please explain in detail. There is a difference between…

A: Firstly let us understand what is the theoretical production capacity is the optimum production…

Q: An increase in variable costs [A] increases p/v ratio [B] increases the profit [C] reduces…

A: Contribution Margin = Sales – Variable costs P/V ratio = Contribution/Sales Margin of Safety in…

Q: Cost-Capacity calculation technique takes into account a constant exponent to relate different costs…

A: Sensitivity analysis is financial analysis that determine The potential percent gain or loss in…

Q: ?Which of the following statements about margin of safety is false .Margin of safety measures the…

A: The MOS is the difference between the budgeted sales or actual sales and the break-even sales. It…

Q: Variable costs change directly with the level of production. Select one: True False

A: Note: Since you have posted multiple questions, we will solve the first question. Please submit a…

Q: Why Fixed Overhead Volume Variance is said to be a favorable variance when the actual output is more…

A: Fixed overhead volume variance is the difference between Applied fixed overhead and Budgeted Fixed…

Q: When volume of production decreases fixed cost per unit will

A: We know: Fixed Cost remains constant at all levels of production. Fixed cost per unit = Fixed Cost…

Q: Variable costs per unit do not change when activity or production increases. Select one: O a. TRUE O…

A: Variable costs: Variable costs are those costs that change in proportion to change in the production…

Q: When should a segment be dropped?

A: Any Segment will be dropped only when there is increase in the Net operating income after the…

Q: Give an example how a manager can increase variable cost while decreasing fixed costs

A: Cost behavior: Cost behavior is the relationship between cost and activity and it is relevant to the…

Q: Holding all other factors constant, the break-even point will be decreased by increasing the fixed…

A: The correct answer is Option C.

Q: In manufacturing a product, if the per-unit cost of direct materials is decreased, what effect will…

A: Decrease in material cost result in Decrease in variable cost

Q: What happens to the total variable costs and the total fixed costs when the level of activity…

A: Formula: Total cost = Variable cost + Fixed cost Sum of both variable and fixed cost derives the…

Q: Explain how the unit contribution margin can be used todetermine the unit sales required to break…

A: The contribution per unit indicates the value left after deducting the variable cost from the sale…

Q: The margin of safety can be defined as the excess of budgeted sales over: break-even sales. net…

A: Cost-volume profit analysis: It can be defined as a cost accounting method that shows the impact of…

Q: Give an example how manager can decrease variable cost while increasing fixed cost

A: Cost behavior: Cost behavior is the relationship between cost and activity and it is relevant to the…

Q: What effect does an increase in volume have on—d. Total variable costs?

Q: Explain the behavioral problem that can result when cost-plus prices are based on variable cost.

A: Following is the answer to the given question

Q: When variable costs increase and all other variables remain unchanged, the break-even point will: a.…

A: Break even point is that point at which business is recovering its fixed costs and variable costs.…

Question

how would a decrease in variable cost per unit affect the break-even point and the margin of safety?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Concept - Break even point and Margin of safety

VIEW

Effect of decrease in variable cost per unit on Break even point and Margin of safety

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Explain how for is possible for costs to change without changing the break-even point.
What causes the variable overhead efficiency variance?
When should a segment be dropped? A. only when the decrease in total contribution margin is less than the decrease in fixed cost B. only when the decrease in total contribution margin is equal to fixed cost C. only when the increase in total contribution margin is more than the decrease in fixed cost D. only when the decrease in total contribution margin is less than the decrease in variable cost
What are some possible reasons for a material price variance? A. substandard material B. labor rate increases C. labor rate decreases D. labor efficiency
How would an Increase in total fixed costs affect the break-even point and the margin of safety?
how would an increase in selling price per unit affect the break-even point and the margin of safety?
Explain how the unit contribution margin can be used todetermine the unit sales required to break even.
How would an increase in sales volume affect the break-even point and the margin of safety?
Without resorting to computations, what is the total contribution margin at the break-even point?
Explain in detail the relationship between cost, volume, and profit and what is the significance of the break-even point
Which of the following is a correct definition of the margin of safety? The excess of contribution margin over fixed costs The excess of gross margin over target income 0 The excess of sales revenue over the breakeven point The excess of ner income over all costs (both variable and fixed
What is the result when the contribution margin ratio increases? A. Break-even point increases B. Fixed Cost decreases C. Break-even point decreases D. No effect on break-even points