Variable Cost Essay

particular, cost measures, are needed to evaluate alternate strategies on whether to introduce a new product or service line, to determine the appropriate sale price and the consequent market position for the firm’s product. Question 1) “Contribution”

total variable cost changed depending on the production whereas the total cost stays the same no matter how much a business sells whether it’d be thousands or none. Unlike a fixed cost, a variable cost can be much more difficult to budget, and may at times exceed the limits of the budget when the variable cost is related to an unexpected expense, and sometimes it can come to the stage where the limits of the budget can exceed due to the unexpected expenses rise. The advantages of Variable costing

3369. Cost behavior refers to the manner in which: *a. a cost changes as the related activity changes b. a cost is allocated to products c. a cost is used in setting selling prices d. a cost is estimated 3370. The three most common cost behavior classifications are: a. variable costs, product costs, and sunk costs *b. fixed costs, variable costs, and mixed costs c. variable costs, period costs, and differential costs d. variable costs, sunk costs, and opportunity costs

Job J57 and Job K52 involve 15 acres of landscaped terrain which will require special-order sprinkler heads to meet the specifications of the project. Using a job cost system to produce these parts, the following events occurred during December 2012. Raw materials were requisitioned from the company’s inventory on December 2 for $5,061; on December 8 for $1,059; and on December 14 for $3,459. In each instance, twothirds

Each of these products can be produced in either of two plants. For administrative reasons, management has imposed a second restriction in this regard. Just one of the two plants should be chosen to be sole producer of the new products. The production cost per unit of each product would be essentially the same in the two plants. However, because of differences in their production facilities, the number of the hours of production time needed per unit of each product might differ between the two plants

of time needed to perform each sewing operation and therefore the total time required to complete a particular style garment. The estimates are derived from time-and-motion (i.e., industrial engineering) studies and take into account a number of variables, including the speed of each type of sewing machine required for a specific operation, the education/training of each operator, and existing technology used by the assembly workers at SEWMEX. Pants Shirts Jackets Other $ 7.00 $ 6.00 $25.00

performance report, actual costs should be compared to budgeted costs at the original budgeted activity level. True False 3. The overhead spending variance and the overhead efficiency variance are useful only if variable overhead really should be proportional to the activity measure that is being used in the flexible budget. True False 4. The variable overhead efficiency variance reflects how

Jump to Navigation Frame Your location: Assessments › View All Submissions › View Attempt View Attempt 1 of 2 Title: | Exam 2 (Chapters 10-18) | Started: | July 7, 2011 12:16 AM | Submitted: | July 7, 2011 2:11 AM | Time spent: | 01:54:47 | Total score: | 94/200 = 47% Total score adjusted by 0.0 Maximum possible score: 200 | 1. | Chapter 10 #265 |   | Use this information for questions that refer to the World Tennis Ball (WTB) Company case. World Tennis Ball Co. (WTB) makes

large company. Actual costs Static Incurred budget Activity level (in units) 800 750 Variable costs: Indirect materials $6,850 $6,600 Electricity $1,312 $1,275 Fixed costs: Administration $3,570

comparison for Variable Cost and Absorption costing using Sales: 60,000 units Production: 80,000 units Ending Inventory: 20,000 units Based on these analyses I have made several recommendations along with pros and cons to aid in the decision-making process. I recommend that we use absorption costing over variable costing. Absorption costing is a method where “…fixed manufacturing costs are inventoriable costs” (Datar, et al, 2009). That is, inventory “absorbs” all manufacturing costs. In the absorption