First of all total cost of product is identified and after that using high and low method variable and fixed costs are segregated
{| |- | 2-33 (a) Cost of goods sold: Carpenter labor to make shelves $ 600,000 Wood to make the shelves $ 450,000 Depreciation on carpentry equipment $ 50,000 Miscellaneous fixed manufacturing overhead (support) $ 150,000 Rent for the building where the shelves are made $ 300,000 Miscellaneous variable manufacturing overhead (support) $ 350,000 Total $1,900,000 Selling and Administrative Costs Sales staff salaries $ 80,000 Office and showroom rental expenses $ 150,000 Advertising $ 200,000 Sales commissions based on number of units sold $ 180,000 Depreciation for office equipment $ 10,000 Total $ 620,000 Sales $3,500,000 Cost of goods sold $1,900,000 Gross margin $1,600,000 Selling and administrative expenses $ 620,000 Net income before taxes, etc. $ 980,000 (b) The following items are variable costs: Carpenter labor to make shelves $ 600,000 Wood to make the shelves $ 450,000 Sales commissions based on number of units sold $ 180,000 Miscellaneous variable manufacturing overhead (support) $ 350,000 Total variable costs $1,580,000 The variable costs per unit are: Sales $ 3,500,000 Total variable costs $ 1,580,000 % of sales 45.1429% Unit sale price $ 70.00 Variable cost per unit $ 31.60 Unit contribution margin $ 38.40 The following items are fixed costs: Sales staff salaries $ 80,000 Office and showroom rental expenses $ 150,000 Depreciation on carpentry equipment $ 50,000 Advertising $ 200,000 Miscellaneous fixed manufacturing overhead (support) $ 150,000 Rent for the building where the shelves are made $ 300,000 Depreciation for office equipment $ 10,000 Total fixed costs $ 940,000 The number of units sold to earn a pre-tax profit of $500,000 is Unit contributin margin $ 38.40 Fixed costs $ 940,000 Pre-tax profit target $ 500,000 Breakeven 37,500 |}
1. Profit from Operations 2. Issue of shares 3. Issue of Debentures 4. Bank Loans (Long Term/short Term) 5. Sale so Fixed Assets
This is called a "transom". In the U.S., this name applies if the window is fixed or if it opens.
Yes can be fixed.
What is fixed capital in real terms? This fixed capital is money that the company possesses but does not have in cash. This can be tapped into by the sale of these fixed asset items but usually, fixed asset items are vital for the running of businesses. Working capital Working capital is completely different from fixed capital and it has a different relevance when looking at a business. Working capital is the moment on a balance sheet that is constantly moving. These are all short term investments and the money is said to be working in the way that it is generating more money and more capital to be put back into the business.
Variable cost = Total Cost/ fixed cost
Calculate the fixed cost, variable costs, and break-even point for the program suggested in Appendix D.
Total Costs = Fixed Cost + Variable Cost soVariable Cost = Total Costs - Fixed Cost.
Fixed cost / (selling price - Variable cost per unit) --> Fixed cost ----------------------------------------------- (Selling Price - Variable Cost Per Unit)
Fixed costs are assigned to all products. Variable costs are assigned only to the product that led to the cost.
Total cost are calculated by adding variable cost and fixed cost FC+VC=TC
Fixed Costs: These are those costs which remain fixed up to certain range of work capacity no matter how much product you produce within that capacity range. Like factory building rent. You pay the rent no matter that did you use that building for making the products or not. Variable Costs: These are those costs which change with the change in the number of product units you produce. Like Material , Labor etc Mixed Cost/Semi Variable Costs: These are those cost the part of which is remain fixed and some part of the cost is variable.
VARIABLE. When this variable has a fixed number assigned to it and does not change, it is called a "fixed variable".
To calculate your break even point you need to total your fixed costs and your variable costs (separately) . The equation is fixed costs ÷ (price - variable costs). Variable costs are your costs associated with production. If u produce one additional unit variable cost will increase and fixed costs will not. When you reach your break even point you have covered all if your fixed costs (for the month, for example). All units sold after break even will bring net income for the period since your fixed costs are covered.
difference between fixed and variable inputs
Pretty much the same as you would calculate the cost for any business. You would add the fixed cost and the variable cost.
Formula to calculate breakeven point is as follows: Break even point = Fixed cost / contribution margin Contribution margin = Sales - Variable cost