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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Describe the cost formula for a strictly fixed cost such as depreciation of $15,000 per year.

To determine

Determine the cost formula for fixed cost.

Explanation

Fixed Cost:

Fixed cost is the cost which is not affected by the change in level of output to produce goods and services in a relevant range.

For instance, office rent, employee salaries and interest paid to debenture holders are the fixed cost.

The combination of fixed cost and variable cost is known as total cost. The equation of statement is as follows:

Total Cost =Fixed Cost +Variable CostFixed Cost =Total Cost Variable Co

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