Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
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Chapter 11, Problem 13Q
To determine
The reason for the terminology appears to be contradictory.
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17.
"Within the relevant range, if there is a change in the level of the cost driver, then:"
fixed costs per unit will change and variable costs per unit will remain the same
fixed costs per unit will remain the same and variable costs per unit will change
fixed and variable costs per unit will remain the same
fixed and variable costs per unit will change
1. Verna Salsbury telis you that she thinks the terms foxed cost and variable cost are confusing. She notes that fued cost per unit changes when the number of units changes. Furthermore, variable cost per unit remains fuxed regardless of how many units are produced. She concludes that the terminology seems to be backward. Explain why her explanation appears to be incorrect. 2. Define foxed cost and variable cost and give an example of each.
1. What is the difference between variable and fixed costs?
Also explain how the total variable cost and total fixed cost is affected by increasing the number of units produced? What happens to the total variable cost per unit and total fixed cost per unit?
3. What is a mixed cost?
2. The high-low method of analyzing mixed costs uses only two observation points: the high and low points of activity. Are these always the best points for prediction purposes? Why or why not?
Chapter 11 Solutions
Survey Of Accounting
Ch. 11 - 1.Define fixed cost and variable cost and give an...Ch. 11 - Prob. 2QCh. 11 - 3.Define the term operating leverage and explain...Ch. 11 - Prob. 4QCh. 11 - Prob. 5QCh. 11 - 6.If volume is increasing, would a company benefit...Ch. 11 - Explain the risk and rewards to a company that...Ch. 11 - 9.Are companies with predominately fixed cost...Ch. 11 - 10.How is the relevant range of activity related...Ch. 11 - Which cost structure has the greater risk?...
Ch. 11 - 14.The president of Bright Corporation tells you...Ch. 11 - Prob. 12QCh. 11 - Prob. 13QCh. 11 - Prob. 14QCh. 11 - Prob. 15QCh. 11 - Prob. 16QCh. 11 - Prob. 17QCh. 11 - Prob. 1ECh. 11 - Prob. 2ECh. 11 - Prob. 3ECh. 11 - Exercise 2-4A Determining total variable cost The...Ch. 11 - Prob. 5ECh. 11 - Prob. 6ECh. 11 - Prob. 7ECh. 11 - Prob. 8ECh. 11 - Prob. 9ECh. 11 - Prob. 10ECh. 11 - Prob. 11ECh. 11 - Prob. 12ECh. 11 - Prepare an income statement using the contribution...Ch. 11 - Prob. 14ECh. 11 - Prob. 15ECh. 11 - Prob. 16ECh. 11 - Prob. 17ECh. 11 - Prob. 18ECh. 11 - Prob. 19ECh. 11 - Prob. 20ECh. 11 - Prob. 21PCh. 11 - Prob. 22PCh. 11 - Problem 2-19A Context-sensitive nature of cost...Ch. 11 - Prob. 24PCh. 11 - Prob. 25PCh. 11 - Prob. 26PCh. 11 - Prob. 27PCh. 11 - Prob. 28PCh. 11 - Prob. 29PCh. 11 - Prob. 1ATCCh. 11 - Prob. 2ATCCh. 11 - Prob. 3ATCCh. 11 - Prob. 4ATCCh. 11 - Prob. 5ATC
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- 24.Within the relevant range, if there is a change in the level of the cost driver then a. fixed and variable costs per unit will change. b. fixed and variable costs per unit will remain the same. c. fixed costs per unit will remain the same and variable costs per unit will change. d. fixed costs per unit will change and variable costs per unit will remain the same. Option 2arrow_forwardPlease explain thoroughly the statement below. (True/false), how and why? "When expressed on a per-unit basis, fixed costs can mislead decision-makers into thinking of them as variable costs." Here is my explanation on the statement above (is it true?): Because the fixed cost per unit varies and variable cost per unit is constant. Therefore, users can think of the fixed cost as a variable cost.arrow_forwardFrisco Corporation is analyzing its fixed and variable costs within its current relevant range. As its cost driver activity changes within the relevant range, which of the following statements is/are correct? As the cost driver level increases, total fixed cost remains unchanged. As the cost driver level increases, unit fixed cost increases. As the cost driver level decreases, unit variable cost decreases. 1, 2, and 3 are correct. 1 and 2 only are correct. 1 only is correct. 2 and 3 only are correct.arrow_forward
- 35. One of the major assumptions limiting the reliability of break-even analysis is that Group of answer choices A. unit variable costs and total fixed costs will vary directly with the change in units sold. B. There is a relevant range in which the various relationships are true for a given period of time. C. productive efficiency will increase as more units are produced. D. Changes in inventory are significant in amount.arrow_forwardFrisco Corporation is analyzing its fixed and variable costs within its current relevant range. As its cost driver activity changes within the relevant range, which of the following statements is/are correct? I. As the cost driver level increases, total fixed cost remains unchanged. II. As the cost driver level increases, unit fixed cost increases. III. As the cost driver level decreases, unit variable cost decreases. 1. I, II, and III are correct. 2. I and II only are correct. 3. I only is correct. 4. II and III only are correct.arrow_forwardWhich of the following statements about margin of safety is false? O a. If only the fixed costs increase but the number of units sold and unit selling price and unit variable cost are all constant, the margin of safety decreases. O b. Margin of safety measures the difference between budgeted revenues and breakeven revenues. none of the given answers is false. O d. If the variable cost per unit decreases but the number of units sold, unit selling price and total fixed cost are all constant, the margin of safety increases. If only the fixed costs decrease but the number of units sold and unit selling price and all constant, the margin of safety decreases.arrow_forward
- 1. Which of the following formulas is used to calculate break-even units? Fixed Costs ÷ Unit Contribution Margin Variable Costs ÷ Contribution Margin Percent Variable Costs ÷ Unit Contribution Margin Fixed Costs ÷ Contribution Margin Percent 2. What effect does the increase in fixed costs have on the break-even units? Decrease Increase No-effect None of these choices are correct. 3. If a company decides to increase the selling price of its product, what is its effect on break-even point? Decrease Increase No-effect None of these choices are correct.arrow_forward20. "Within the relevant range, if there is a change in the level of the cost driver, then:" total fixed costs will remain the same and total variable costs will change total fixed costs will change and total variable costs will remain the same total fixed costs and total variable costs will remain the same total fixed costs and total variable costs will changearrow_forward20. Which of the following statements is correct about variable costs? a. Variable costs vary on per unit basis but remain the same in total as the level of activity changes b. Variable costs vary on per unit basis as the level of activity changes c. Variable costs vary in total in direct proportion to changes in the level of activity d. Variable costs remain the same in total as the level of activity changesarrow_forward
- TYU is choosing between two alternative processes. Process A has a fixed costs of P150,000 and a variable cost of P15 per unit while Process B has a fixed costs of P300,000 and a variable cost of P10 per unit. What is the level of production in units that would make TYU to be indifferent between the two processes?arrow_forward25. Which of the following costs has no relationship with the level of output?a) Semi-variable costs.b) Variable costs. c) Stepped fixed costs. d) Fixed costs.arrow_forwardWhich of the followings is not correct about cost-based pricing? Select one: a. Total fixed costs change as the production amount changes. b. Total costs are the sum of total fixed and variable costs. c. Total variable costs increase due to a rise in production level. d. Variable costs per unit tend to be constant with respect to number of units produced.arrow_forward
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