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. Verna Salsbury tells you that she thinks the terms fixed cost and variable cost are confusing. She notes that fixed cost per unit changes when thenumber of units changes. Furthermore, variable cost per unit remains fixed regardless of how many units are produced. She concludes that theterminology seems to be backward. Explain why her explanation appears to be incorrect.2. Define fixed cost and variable cost and give an example of each.

Cost is the amount incurred on receiving the services or goods. Therefore, any amount which is…

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.

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.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Please 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.
Question 1:Verna Salsbury tells you that she thinks the terms fixed cost and variable cost are confusing. She notes that fixed cost per unit changes when the number of units changes. Furthermore, variable cost per unit remains fixed regardless of how many units are produced. She concludes that the terminology seems to be backward. Explain why her explanation appears to be incorrect.
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?
Select the correct statement regarding fixed costs. They do not change, because fixed costs should be ignored in decision making. The fixed cost per unit increases when volume increases. The fixed cost per unit decreases when volume increases. The fixed cost per unit does not change when volume decreases.
Select the correct statement regarding fixed costs. A) Because they do not change, fixed costs should be ignored in decision making.B) The fixed cost per unit decreases when volume increases. C) The fixed cost per unit increases when volume increases.D) The fixed cost per unit does not change when volume decreases
Which of the following statements related to CVP chart is not true? O a. None of the given answers. O b. To calculate the total fixed cost from a graph is by multiplying a level of volume by the variable cost per unit found out earlier and subtracting that from the total cost for that level of volume. Oc. The high-low method is a way to estimate the cost behavior by graphically connecting the two cost amounts identified with the highest and lowest volume levels. O d. To determine the variable cost per unit froma graph, the change in cost is divided by the change in units. O e. The slope of the total cost line determines the fixed cost per unit. Of. The intercept between the total cost line on a graph and the y axis determines the fixed cost. on Mazoon Company sells 500 units resulting in $300,000 of sales revenue, $100,000 of variable costs, and $36,000 of fixed costs. The number of units that must be sold to achieve $40,000 of operating income is: Fir F2 F3 F9 F10 F1 F4 F5 F6 F7 F8 23…
1. Fill in the missing numbers in the table. Use the following questions to help fill in the missing numbers in the table: a. What is the total contribution margin? b. What is the total variable expense? c. How many units were sold? d. What is the per-unit variable expense? e. What is the per-unit contribution margin? 2. Answer the following questions about breakeven analysis: a. What is the breakeven point in units? b. What is the breakeven point in sales dollars? 3. Answer the following questions about target profit analysis and safety margin: a. How many units must the company sell in order to earn a profit of $48,000? b. What is the current margin of safety in units? c. What is the margin of safety in sales dollars? d. What is the margin of safety in percentage?
Which of the following statements about margin of safety is false? O a. If only the fixed costs decrease but the number of units sold and unit selling price and unit variable cost are all constant, the margin of safety increases. Ob. 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 decreases. O c. 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 d. none of the given answers is false. O e. Margin of safety measures the difference between budgeted revenues and breakeven revenues. OUS PAGE NEXT PAGE F9 F10 F4 F5 F7 F3 F1 & @ 23 7 8 A 1 2 4 W E T Y K S DEF 1G yH ĭ J 1. C { V BYN í M
Which of the following statements related to CVP chart is not true? O a. To determine the variable cost per unit from a graph, the change in cost is divided by the change in units. O b. The scatter graph method is a way to estimate the cost behavior by graphically connecting the two cost amounts identified with the highest and lowest volume levels. O c. The slope of the total cost line determines the variable cost per unit. O d. To calculate the total fixed cost from a graph is by multiplying a level of volume by the variable cost per unit found out earlier and subtracting that from the total cost for that level of volume. e. The intercept between the total cost line on a graph and the y-axis determines the fixed cost. f. None of the given answers.
Complete the following statements with one of the terms listed here: You may use a term more than once and some terms may not be used at all. Differential Costs Irrelevant Costs Controllable Costs Marginal Costs Fixed Costs Average Cost Uncontrollable Costs Sunk Costs Variable Costs 1. For decision-making purposes, costs that do not differ between alternatives are 2. Costs that have already been incurred are called 3. Managers cannot influence .........in the short run. 4. Total stay constant over a wide range of production volumes. 5. The. action. is the difference in cost between two alternative courses of 6. The product's is the cost of making one more unit. Total costs decrease when production volume decreases. 7. A product's and ............ not the product's should be used to forecast total costs at different production volumes.
Which of the following cost behavior assumptions is true? (You may select morethan one answer.)a. Variable costs are constant if expressed on a per unit basis.b. Total variable costs increase as the level of activity increases.c. The average fixed cost per unit increases as the level of activity increases.d. Total fixed costs decrease as the level of activity decreases
Which of the following is not a true statement about variable costs? a. Total cost is known to change in proportion to any changes in related level of volume or activity. O b. When considering total cost behaviour, focus on fixed and variable costs. O c. A total cost that can change in proportion to changes in the number of products produced. O d. Total cost never changes in proportion to any changes in related levels of volume or activity. O e. An important cost to identify so managers can make important management decisions.