Concept explainers
Describe how total variable costs and unit variable costs behave with changes in the level of activity.
Describe the behavior of the total variable costs and unit variable costs with changes in the level of activity.
Explanation of Solution
Cost Behavior: It refers to the method in which a cost changes with respect to the changes in its related activities. This method helps the management in estimating costs for decision making and predict future profits.
Describe the behavior of the total variable costs and unit variable costs with changes in the level of activity as follows:
The total variable costs changes proportionately with respect to the changes in the level of activity. However, the unit variable costs remains constant irrespective to the changes in the level of activity.
Want to see more full solutions like this?
Chapter 20 Solutions
Financial And Managerial Accounting
- Describe how total fixed costs and unit fixed costs behave with changes in the level of activity.arrow_forwardWhich of the following graphs illustrates how unit variable costs behave with changes in total units produced?arrow_forwardDescribe how total variable costs and unit variable costs behave with changes in the level of activityarrow_forward
- Which of the following graphs best illustrates fixed costs per unit as the activity base changes?arrow_forwardIn the cost equation Y=a+bx, Y represents which of the following? A. fixed costs B. variable costs C. total costs D. units of productionarrow_forwardExplain the differences among fixed costs, variable costs, and mixed costs.arrow_forward
- Which of the following graphs illustrates how total fixed costs be have with changes in total units producedarrow_forwardExplain how a scatter graph is used to identify and measure cost behavior.arrow_forwardDescribe the product life cycle. How do unit-level costs behave in relation to the product life cycle? Batch-level costs? Product-level costs? Facility-level costs?arrow_forward
- What are organizational and operational activities? Organizational cost drivers? Operational cost drivers?arrow_forwardWhat is the primary difference between the two cost accounting systems regarding the accumulation of costs and the calculation of unit costs?arrow_forwardHow does absorption costing differ from variable costing? When will absorption-costing operating income exceed variable-costing operating income?arrow_forward
- Financial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubSurvey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage Learning
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting (Text Only)AccountingISBN:9781285743615Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningFinancial & Managerial AccountingAccountingISBN:9781285866307Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning