Mills‚ Ltd.‚ sells a line of women’s knit underwear. The firm now sells about 20‚000 pairs a year at a average price of $10 each. Fixed cost amount to $60‚000‚ and total variable cost equal $120‚000. The production department has estimated that a 10 percent increase in output would not affect fixed cost but would reduce average variable cost by 40 cents. The marketing department advocates a price reduction of 5 percent to increase sales‚ total revenues‚ and profits. The arc elasticity of demand with
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50 Vases 0.42 0.08 0.50 12.50 In addition to the direct variable costs‚ I also detected multiple operating costs. I would underline among others‚ the following: Furnace Gas $1‚000.00 Insurance 90.00 Rent 175.00 Total Fixed $1‚265.00 These costs are fixed. They do not depend on a production level. Even if you do not produce any number of goods‚ the fixed costs will stay the same. There are also a number of variable operating costs estimated as following: Office supplies $25
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Oldsmobile‚ Cadillac‚ and Oakland‚ today known as Pontiac" (General Motors‚ 2012). In this paper GM ’s income statement will be reviewed to figure out the following calculations: the number of cars sold each quarter‚ the elasticities‚ marginal cost‚ variable cost‚ and fixed costs. After figuring out these calculations‚ there will be a clear answer to what the future options are for General Motors if they decide to expand. Using the revenue figures from the income statement and the prices per car calculate
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application of fixed costs‚ variable costs‚ the least-squares method‚ and the high-low method. Your assignment is to complete the requirements identified for Case 6-49: 1-4. 1. High-low method: Variable administrative cost per patient = Total cost at 1‚500 patients=$16‚100 Variable cost at 1‚500 patients=15‚000 Fixed cost per month=$1‚100 Cost formula: Total monthly administrative cost = $1‚100 + $10X‚ where X is the number of patients for the month. The variable cost per patient is $10.
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mathematical model that defines a functional relationship between various input variables (or independent variables) and one or more bottom-line performance measures (or dependent variables). The following equation expresses this relationship: Y = f(X1‚ X2‚ ...‚ Xk) In many spreadsheets‚ the values of various input cells are determined by the person using the spreadsheet. These input cells correspond to the independent variables X1‚ X2‚ ...‚ Xk in the previous equation. Various formulas (represented
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Competition Bikes Inc. Storyline Managing Capital & Financial Assets 04/12/2014 WGU JET2 Financial Analysis Task 4 - PASSED To: Vice President The following is a summary report to recommend whether Competition Bikes should change its traditional costing method to activity based costing‚ and an analysis of the breakeven point with regards to sales units and dollars for both CarbonLite and Titanium bikes. It also discusses the impacts to the breakeven point. The cost-volume-profit evaluation
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Costing Methods Paper Variable and absorption costing methods are two different costing methods. Almost all successful companies in the world use both methods. Variable costing and absorption costing cannot be substituted for one another because both the systems have their own benefits and limitations (Accounting for management). This paper will complete and discuss exercise 19-17 in Wiley Plus: it will discuss the following questions: In this case‚ would it be better to use the variable or absorption costing
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This number cannot exceed the 40 hours available. Since hours per ton is the reciprocal of the tons per hour given above‚ we have a constraint on the variables: (1/200) XB + (1/140) XC ≤ 40. There are also production limits: 0 ≤ XB ≤ 6000 0 ≤ XC ≤ 4000 In the statement of the problem above‚ the upper limits were specified‚ but the lower limits were assumed — it was obvious that a negative production
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Accounting II Final Exam Review Chapter 18 Direct and Indirect Costs -Cost – a payment of cash or a commitment to pay cash in the future for the purpose of generating revenues. A. Cost object – costs that are often classified by their relationship to a segment of operations. Ex. Product‚ sales territory‚ a department‚ or an activity‚ such as research and development 1. Direct Cost = identified with and can be traced to a cost object Ex. The wood for a guitar is a direct cost of the
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price is the sum of cost and profit. Therefore the forecast of the price depends on the price comparison of competition‚ considering that this company offers a similar service like mine. All business involves two types of costs: fixed costs and variable costs‚ so it is important to distinguish between reasonable‚ allowable‚ and allocable costs. Cost reasonableness is a matter of common sense. In the case of Sky Fighters Inc which mainly deals with the government in contracting for special products
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