Aunty Marys Apple Pie produces pies. Mary has to pay rent every month costing $20000. She also pays $400 monthly to Courts Ltd. for machines she has on hire purchase. Raw materials to bake amount to $3500. She also pays wages to her employees costing $2000 per hour. She has one employee who works 30 hours for the month. In the month of April Mary did not produce any pies. what would Marys fixed cost be for the month of April?

VARIABLE COSTING

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

Aunty Mary’s Apple Pie produces pies. Mary has to pay rent every month costing $20000. She also pays $400 monthly to Courts Ltd. for machines she has on hire purchase. Raw materials to bake amount to $3500. She also pays wages to her employees costing $2000 per hour. She has one employee who works 30 hours for the month. In the month of April Mary did not produce any pies. what would Mary’s fixed cost be for the month of April?

A	$23, 900
B	$20, 400
C	$63, 500
D	$0

Explanation:

Detailed explanation-1: -Therefore, a semi-variable cost may be classified into any expense account such as utility or rent, which will show up on the income statement. The analysis of semi-variable costs and its components is a managerial accounting function, for internal use only.

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: -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-4: -The bakery’s fixed costs consist of rent, bakery equipment, taxes, insurance, and utilities. The bakery’s variable costs for making one loaf of bread are $1.80. These costs include bakery ingredients, marketing, and overhead.

There is 1 question to complete.

ECONOMICS

COST ACCOUNTING

VARIABLE COSTING