COST ACCOUNTING
COST BEHAVIORS
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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variable
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overheads
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fixed
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relevant
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Detailed explanation-1: -Fixed costs do not vary with the production level. Total fixed costs remain the same, within the relevant range.
Detailed explanation-2: -The variable cost per unit is the amount of labor, materials, and other resources required to produce your product. For example, if your company sells sets of kitchen knives for $300 but each set requires $200 to create, test, package, and market, your variable cost per unit is $200.
Detailed explanation-3: -Fixed costs: The total amount of fixed costs remains unchanged when volume changes, within a relevant range of operations. The relevant range of operations is the normal operating range for a business, with existing machinery.
Detailed explanation-4: -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-5: -The fixed cost refers to a cost that doesn’t change regardless of the production output. In contrast, a variable cost is one that depends solely on the level of output. A semi-variable cost therefore combines the features of a fixed cost and a variable cost.