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when number of activity or units decreases
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∙ 10y ago
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How do you calculate variable unit costs and total annual costs?
Annual units sold, 1000. Raw materials annual cost 650. Building rent annual cost 9000. If sales volume increased to 6000 units and 8000 units, what is the total annual cost and unit cost for fixed varible? ---------------------------- Cost per unit of raw material=650/1000= 0.65 Fixed cost(Rent)=9000 Fixed cost per unit= 9000/1000= 9.00 If the sales volume increases to 6000 units, then total cost= 12900 and cost per unit = 2.150 Variable cost+ fixed cost= (0.65*6000) + 9000= 12900 / 6000 = 2.15 If the sales volume increases to 8000 units, then total cost= 14200 and cost per unit = 1.775 (0.65*8000) + 9000= 14200 / 8000 = 1.775
How do you calculate breakeven analysis?
Fixed cost / (selling price - Variable cost per unit) --> Fixed cost ----------------------------------------------- (Selling Price - Variable Cost Per Unit)
Fixed costs expressed on a per unit basis vary inversely with changes in activity True or false?
True, because when fixed costs are viewed on a per unit basis and as activity level rises we will see a decrease in the average cost. Conversely, fix costs increases per unit as the activity level falls. An example would be the $10,000 rental cost on a machine that assembles 5,000 units which has an average cost of $2/ per unit. Conversely, if the machine only produces 2500 units the average cost will be $4/ per unit.
A company is producing 500 units of output Its average variable costs are 2.00 and its average fixed costs are 50 What is the total cost?
Total cost = variable cost + fixed cost fixed cost = 50 fixed cost per unit = 50 / 500 = .1 total cost = 2 + .1 = 2.1 per unit
Does Fixed cost per unit increase as activity decreases and decrease as activity increases?
true.as fixed costs remain the same with change in activity, the per unit price of each unit changes inversely with activity level.rent is generally a fixed costs.if rent is $10,000, and 100 units are produced, then the per unit price is $10 with respect to rent.if rent is $10,000, and 200 units are produced, then the per unit price is $5 with respect to rent.thus, as we produced more units, or as the activity level went up, the average costs per unit decreased.
Do fixed cost change per unit?
Yes fixed cost remain fixed in overall amount but it varies as per unit for example if one unit produced fixed cost 50000 per unit fixed cost 50000 but if 2 units produced fixed cost remains 50000 but per unit fixed cost changed to 25000 (50000/2).
Does per unit fixed cost vary?
Yes fixed cost varies between units as total overall fixed cost amount remains same but increase in number of units change the per unit fixed cost for example fixed cost of 10 will be 10 per unit in case of 1 unit produce and fixed cost per unit will be 1 in case of 10 units produced.
How do you calculate variable unit costs and total annual costs?
Annual units sold, 1000. Raw materials annual cost 650. Building rent annual cost 9000. If sales volume increased to 6000 units and 8000 units, what is the total annual cost and unit cost for fixed varible? ---------------------------- Cost per unit of raw material=650/1000= 0.65 Fixed cost(Rent)=9000 Fixed cost per unit= 9000/1000= 9.00 If the sales volume increases to 6000 units, then total cost= 12900 and cost per unit = 2.150 Variable cost+ fixed cost= (0.65*6000) + 9000= 12900 / 6000 = 2.15 If the sales volume increases to 8000 units, then total cost= 14200 and cost per unit = 1.775 (0.65*8000) + 9000= 14200 / 8000 = 1.775
How do you calculate breakeven analysis?
Fixed cost / (selling price - Variable cost per unit) --> Fixed cost ----------------------------------------------- (Selling Price - Variable Cost Per Unit)
As production increases what should happen to the fixed costs per unit?
decrease
Fixed costs expressed on a per unit basis vary inversely with changes in activity True or false?
True, because when fixed costs are viewed on a per unit basis and as activity level rises we will see a decrease in the average cost. Conversely, fix costs increases per unit as the activity level falls. An example would be the $10,000 rental cost on a machine that assembles 5,000 units which has an average cost of $2/ per unit. Conversely, if the machine only produces 2500 units the average cost will be $4/ per unit.
What happens as the level of activity decrease within the relevant range?
Although fixed cost per unit decreases with increases in activity levels, total fixed cost is not affected by changes in the activity level within the relevant range.
A company is producing 500 units of output Its average variable costs are 2.00 and its average fixed costs are 50 What is the total cost?
Total cost = variable cost + fixed cost fixed cost = 50 fixed cost per unit = 50 / 500 = .1 total cost = 2 + .1 = 2.1 per unit
How to calculate total variable cost per unit?
Easiest way: Total costs per unit - fixed costs per unit = variable cost per unit. Also recatting into accounting.
Contribution margin per unit?
Contribution margin per unit is the contribution which contribute by sales of one unit for the recovery of fixed cost after fulfiling the variable cost of product.
When using a flexible budget a decrease in activity within the relevant range does what?
I wanted to get this answered more fully, and correctly. Decreasing variable costs per unit is just wrong. When speaking of variable vs fixed costs, it means in total. A variable cost stays the same per unit, but as volume changes, the total variable costs increase and decrease. (Unless something specifically mentions there's a change per unit.) A fixed cost is fixed in total regardless of volume. But fixed per unit increases and decreases with volume changes. In order for variable and fixed to have their proper meanings, you have to think about them as total costs. For example, if I buy a certain shirt for $7 and sell it for $15, those are variable. They stay the same per unit and I gross $8 per shirt (called contribution margin). The more I sell, the more sales revenue I have and the more variable cost I have -- two shirts will have $7x2 ($14) of variable costs etc. If my fixed costs are $100,000, that will remain fixed regardless of how many of anything I sell. An example of a fixed cost is rent. If activity decreases, total variable costs will decrease, but not per unit variable costs. Total costs also decrease, but that's not complete. And fixed per unit increases, because you don't have as much volume to spread the fixed costs over.
Does Fixed cost per unit increase as activity decreases and decrease as activity increases?
true.as fixed costs remain the same with change in activity, the per unit price of each unit changes inversely with activity level.rent is generally a fixed costs.if rent is $10,000, and 100 units are produced, then the per unit price is $10 with respect to rent.if rent is $10,000, and 200 units are produced, then the per unit price is $5 with respect to rent.thus, as we produced more units, or as the activity level went up, the average costs per unit decreased.
