COST ACCOUNTING
COST BEHAVIORS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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units fixed costs variable costs total costs unit cost1, 000 £37, 200 £19, 800 £57, 000 £57.00
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units fixed costs variable costs total costs unit cost 3, 000 £37, 200 £39, 600 £76, 800 £38.40
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units fixed costs variable costs total costs unit cost3, 000 £37, 000 £59, 400 £96, 500 £32.10
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units fixed costs variable costs total costs unit cost3, 000 £37, 200 £59, 400 £96, 600 £32.20
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Detailed explanation-1: -First, add up all of your production costs. Make sure to be clear about which costs are fixed and which ones are variable. Take your total cost of production and subtract your variable costs multiplied by the number of units you produced. This will give you your total fixed cost.
Detailed explanation-2: -Fixed costs remain the same throughout a specific period. Variable costs can increase or decrease based on the output of the business. Examples of fixed costs include rent, taxes, and insurance. Examples of variable costs include credit card fees, direct labor, and commission.
Detailed explanation-3: -Fixed costs do not vary with the production level. Total fixed costs remain the same, within the relevant range. However, the fixed cost per unit decreases as production increases, because the same fixed costs are spread over more units.