ECONOMICS
PROFIT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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This is a total profit of £6.50
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This is margin of £6.50
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This is a margin of 65%
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This is a £6.50 contribution to fixed costs.
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Detailed explanation-1: -Variable costs are costs that change as the volume changes. Examples of variable costs are raw materials, piece-rate labor, production supplies, commissions, delivery costs, packaging supplies, and credit card fees. In some accounting statements, the Variable costs of production are called the “Cost of Goods Sold.”
Detailed explanation-2: -Answer and Explanation: The correct statement about absorption and variable costing methods is option C. If the units produced are above the units sold, the company will have ending inventory units at the end.
Detailed explanation-3: -Wages are variable costs in a firm, as the number of employees required will vary based on the demand for production, therefore the wages paid to the total number of employees will vary with the number of employees.
Detailed explanation-4: -Electricity is a good example of a semi-variable cost. The base rate for service may be constant, but as production grows, power consumption and the company’s electricity bills go up.