Variable and Fixed Costs There are different types of costs associated with the running of Grear Rafting. In order to develop a plan for Grear Rafting to make a profit‚ it is necessary to identify those costs that can be changed‚ and those that cannot be changed. 1. Variable Cost: A variable cost is a cost that increases in total as output increases and decreases in total as output decreases. (Rich et al‚ 2010). For example‚ cotton used in making cotton shirts is a variable cost. As a company
Premium Variable cost Contribution margin Costs
there are costs incurred due to the consumption of resources. Presented in Exhibit 1 are the costs of manufacturing and marketing hydraulic hoists at the company’s normal volume of 3‚000 units per month: Exhibit 1 – Cost per Unit for Hydraulic Hoists. Cost per Unit for Hydraulic Hoists. Unit manufacturing cost: Variable materials $550 Variable labor $825 Variable overhead $420 Fixed overhead $660 Total unit manufacturing cost $2455
Premium Variable cost Costs Total cost
Job U12 Cost Sheet $ Direct Materials: Plain t-shirts 4‚800 Paints 1‚400 Design & making of silk-screen 2‚000 Direct Labour: 600 t-shirts1 4‚200 Factory Overhead2 840 Additional Costs: Correction of silk-screen 100 White paint 20 20 t-shirts replaced3 160 Labour on 60 t-shirts4 200 Overhead on 60 t-shirts5 40 Cost incurred on reworked t-shirts6 20 Sale of reworked t-shirts7 -200 Job transfer to U26 -160 Total Costs 13
Premium Costs Variable cost Management accounting
160‚000 Variable Costs: Direct Materials $ 6.50 Direct Labor $10.00 Variable Overhead $ 5.80 Mktg‚ Distrib‚ & Admin $ 1.70 Total Variable Costs: $24.00 $1‚440‚000 Contribution Margin $12.00 $ 720‚000 Fixed Costs: Manufacturing Overhead $ 5.00 Mktg & Admin $ 4.50 Total Fixed Costs: $ 9.50 $ 570‚000 Operating Income: $ 150‚000 (2) Waverly’s Breakeven Point in Units Sale Price per Unit: $36 Variable Costs per Unit: $24 Contribution
Premium Variable cost Fixed cost Costs
Introduction Break-even analysis is a technique widely used by production management and management accountants. It is based on categorising production costs between those which are "variable" (costs that change when the production output changes) and those that are "fixed" (costs not directly related to the volume of production). Total variable and fixed costs are compared with sales revenue in order to determine the level of sales volume‚ sales value or production at which the business makes neither a
Premium Costs Variable cost Fixed cost
hour and works a 40-hour week and a 50-week year‚ regardless of the number of haircuts. Rent and other fixed expenses are $1‚750 per month. Hair shampoo used on all clients is .40 per client. Assume that the only service performed is the giving of haircuts (including shampoo)‚ the unit price of which is $12. Based on the information provided‚ Andre wants you to find the contribution margin cost per haircut. The calculations are as followed. There are 5 barbers and they are paid $9.90 per hour. They
Premium Variable cost Costs Management accounting
repair machinery‚ and computer systems. Write a two-page report addressing the following topics: 1. Identify several of the variable‚ mixed‚ and fixed costs that the Polaris services department is likely to incur in carrying out its services. 2. Assume that Polaris’s services revenues are expected to grow by 25% in the next year. How do you expect the costs identified in part 1 to change‚ if at all? 3. Based on your answer to part 2‚ can Polaris use the contribution margin ratio to predict how income
Premium Variable cost Costs Management accounting
Cost Volume Profit Analysis: Its Assumptions and Their Pitfalls By Duncan Williamson Introduction The importance of identifying and criticising the underlying assumptions of cost volume profit analysis (CVP analysis) rests on the practical application of it: anyone who has ever tried (or anyone who may wish) to apply CVP analysis in reality‚ whilst trying to apply the substance of CVP theory will have found severe difficulties. These notes will help you solve those problems. Rendesia
Premium Variable cost Costs Fixed cost
a way to change costs and revenue so as to obtain a profit of 176 million. I. PROBLEM STATEMENT How to re-organize the firm to achieve a profit of Lit. 176 million a year‚ which would be almost 9% of sales of Lit 1‚980 million? II. OBJECTIVES a. to show the changes in income statement when selling price is assumed to increase. b. to show the changes in income statement when fixed costs are assumed to decrease. c. to show the changes in income statement when variable costs are assumed to decrease
Premium Variable cost Costs Cost
manufacture of RecRobo‚ a three-wheeled robot that can scan a home for fires and gas leaks and then transmit this information to a mobile phone. The cost structure to manufacture 20‚000 RecRobo’s is as follows. Cost Direct materials ($40 per robot) $ 800‚000 Direct labor ($30 per robot) 600‚000 Variable overhead ($6 per robot) 120‚000 Allocated fixed overhead ($25 per robot) 500‚000 Total $2‚020‚000 SY Telc is approached by Chen Inc. which offers to make RecRobo for $90 per unit or $1‚800‚000
Premium Costs Variable cost Fixed cost