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Will total variable costs increase if the level of activity increases within the relevant range?
yes
Which costs will change with an increase in activity within the relevant range?
Unit Fixed Cost and Total Variable Cost Kenny Kalejaiye
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.
Which costs wilchange with a decrease in activity within the relevant range?
With a decrease in activity within the relevant range, variable costs will typically decrease as they are directly proportional to the level of activity, such as production or sales volume. Fixed costs, on the other hand, remain unchanged within the relevant range regardless of the activity level. However, if the decrease in activity is significant enough to fall outside the relevant range, some fixed costs may become variable or change. Overall, the primary impact will be a reduction in total variable costs.
Which cost will change with a decrease in activity within relevant range?
unit fixed costs and total variable cost
Will total variable costs increase if the level of activity increases within the relevant range?
yes
Which costs will change with an increase in activity within the relevant range?
Unit Fixed Cost and Total Variable Cost Kenny Kalejaiye
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.
Which costs wilchange with a decrease in activity within the relevant range?
With a decrease in activity within the relevant range, variable costs will typically decrease as they are directly proportional to the level of activity, such as production or sales volume. Fixed costs, on the other hand, remain unchanged within the relevant range regardless of the activity level. However, if the decrease in activity is significant enough to fall outside the relevant range, some fixed costs may become variable or change. Overall, the primary impact will be a reduction in total variable costs.
Which cost will change with a decrease in activity within relevant range?
unit fixed costs and total variable cost
What happens Cost driver activity level increases within the relevant range?
total fixed costs remain unchanged
What causes an increase in the kinetic energy of atoms within an element and an increase in the kinetic energy of molecules or ions within a compound?
An increase in temperature causes an increase in the kinetic energy of atoms in an element. For compounds, an increase in temperature also results in higher kinetic energy of the molecules or ions due to increased movement and collisions among the particles.
What would the flexible budget amount be if the master budget revenue was 250000 and the actual results were 254800 and how do you get the answer?
With flexible budget, you check whether the actual activity level is within the range of activity for flexible budget. If yes, then you compare very easily. Just extrapolate your budget for the actual activity level. Only Variable costs needs to be updated (as Fixed costs remain same for a particular activity level). Finally you have the actual results and budgeted results, both on the same activity level. This provides you the ground for comparing the both.
Which costs decrease in activity within the relevant range?
Within the relevant range, variable costs decrease per unit as production volume increases, due to the spreading of fixed costs over a larger number of units. Additionally, economies of scale may lead to lower average costs as production increases, often resulting in decreased costs for materials or labor per unit. However, total fixed costs remain constant within this range, since they do not change with the level of activity.
What is relevant range and why is it important?
The relevant range refers to the activity level within which fixed and variable cost behaviors remain consistent. It is important because decisions regarding budgeting, forecasting, and cost management are based on expected production or sales levels within this range. Outside the relevant range, costs may change, leading to inaccurate financial projections and potentially poor decision-making. Understanding the relevant range helps businesses maintain effective cost control and resource allocation.
What are the steps to developing a flexible budget?
The flexible budget uses the master budget as its basis. To develop the flexible budget, management should take the following steps. 1. Identify the activity index and the relevant range of activity. 2. Identify the variable costs, and determine the budgeted variable cost per unit of activity for each cost. 3. Identify the fixed costs, and determine the budgeted amount for each cost. 4. Prepare the budget for selected increments of activity within the relevant range.
A is a fixed cost b is a variable cost. during the current year the level of activity has decreaed but is still within the relevant range. we would expect that?
A remains constant and B decreases. profit decrease
