Suppose, at a given point in time, Snappy Snack Shack operates in a perfectly competitive market. and is producing its profit-maximizing level of output. Suppose further that at this level of production, Snappy's average total cost of producing snacks is $1.70, average variable cost is $1.25, and marginal cost is $1.60. Over time, the number of firms selling snacks will everything else held constant. Select one: O A remain unchanged OB. increase OC. decrease
Cost-Volume-Profit Analysis
Cost Volume Profit (CVP) analysis is a cost accounting method that analyses the effect of fluctuating cost and volume on the operating profit. Also known as break-even analysis, CVP determines the break-even point for varying volumes of sales and cost structures. This information helps the managers make economic decisions on a short-term basis. CVP analysis is based on many assumptions. Sales price, variable costs, and fixed costs per unit are assumed to be constant. The analysis also assumes that all units produced are sold and costs get impacted due to changes in activities. All costs incurred by the company like administrative, manufacturing, and selling costs are identified as either fixed or variable.
Marginal Costing
Marginal cost is defined as the change in the total cost which takes place when one additional unit of a product is manufactured. The marginal cost is influenced only by the variations which generally occur in the variable costs because the fixed costs remain the same irrespective of the output produced. The concept of marginal cost is used for product pricing when the customers want the lowest possible price for a certain number of orders. There is no accounting entry for marginal cost and it is only used by the management for taking effective decisions.
Please answer fast please arjent help please ASAP pls answer
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
