FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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What is the definition of a variable cost? Multiple Choice
The total cost (materials, labor, and
A cost that varies with the cost driver, but in discrete steps within the relevant range; is also called a semi-fixed cost.
A cost that changes in total in response to changes in one or more cost drivers.
A cost that, within the relevant range, includes both variable and fixed cost components.
The portion of the total cost that, within the relevant range, does not change with a change in the quantity of a designated cost driver.
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- What costs are assigned to a segment under the contribution approach? Distinguish between a traceable fixed cost and a common fixed cost. Explain how the contribution margin is different from the segment margin.arrow_forwardWhen using the high-low method to estimate costs, the formula “Change in Cost divided by Change in Units” (or “Change in Total Cost divided by Change in Activity Level”) is used to estimate the: Fixed cost per unit Mixed cost per unit Profit per unit Indirect cost per unit Variable cost per unit Differential cost per unit Opportunity cost per unitarrow_forward4. In a typical cost formula a. Fixed costs are per unit and variable costs are per unit b. Fixed costs are per unit and variable costs are in total c. Fixed costs are in total and variable costs are in total Fixed costs are in total and variable costs are per unitarrow_forward
- What is the key difference between Absorption and Variable Costing? A Full Costing treats Manufacturing Overhead as a period cost B Variable Costing treats Fixed Manufacturing Overhead as a period cost C Absorption Costing only considers variable costs to calculate net income D Variable Costing only considers variable costs to calculate net incomearrow_forwardExplain the impact of an increase in the level of activity (or cost driver) on (a) total fixed cost and (b) fixed cost per unit of activity.arrow_forwardWhich type of income statements, Contribution Format or Traditional Format should be used to identify relevant costs? Please provide explanation for your answer. Then provide an example including two income statements based on absorption and variable costing, respectively, to support your explanation.arrow_forward
- Question A(iii) and B pleasearrow_forwardWhich of the following is a correct statement? O A. the fixed manufacturing cost is based on a per unit cost, when using Variable Costing O B. the fixed manufacturing cost is based on a per unit cost, when using Absorption Costing and a total cost, when using Variable Costing Oc the variable manufacturing cost is shown as a total cost in both Variable Costing and Absorption Costing O D. the fixed manufacturing cost is always shown as a total cost, when using Absorption Costingarrow_forwardThe optimal quantity order to reduce the overall cost is usually stated as EOQ. why it is related to one time order? How carrying and ordering cost is related to each other?arrow_forward
- What is the difference between variable costing and absorption costing income statements? a. Provide a hypothetical income statement in both formats in which the number of units sold is different from the number of units manufactured. b. Explain the contrast between the two formats.arrow_forwardA cost that has characteristics of both a variable cost and a fixed cost is called a Oa. variable/fixed cost Ob. sunk cost Oc. discretionary cost Od, mixed costarrow_forwardHow does the fixed cost per unit change as the level of activity (or cost driver) increases? Why?arrow_forward
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