1. Verna Salsbury telis you that she thinks the terms foxed cost and variable cost are confusing. She notes that fued cost per unit changes when the number of units changes. Furthermore, variable cost per unit remains fuxed regardless of how many units are produced. She concludes that the terminology seems to be backward. Explain why her explanation appears to be incorrect. 2. Define foxed cost and variable cost and give an example of each. 1. Verna Salsbury tells you that she thinks the terms fixed cost and variable cost are confusing. She notes that fixed cost per unit changes when thenumber of units changes. Furthermore, variable cost per unit remains fixed regardless of how many units are produced. She concludes that theterminology seems to be backward. Explain why her explanation appears to be incorrect.2. Define fixed cost and variable cost and give an example of each.

Verna Salsbury telis you that she thinks the terms foxed cost and variable cost are confusing. She notes that fued cost per unit changes when the number of units changes. Furthermore, variable cost per unit remains fuxed regardless of how many units are produced. She concludes that the terminology seems to be backward. Explain why her explanation appears to be incorrect. 2. Define foxed cost and variable cost and give an example of each.

Verna Salsbury telis you that she thinks the terms foxed cost and variable cost are confusing. She notes that fued cost per unit changes when the number of units changes. Furthermore, variable cost per unit remains fuxed regardless of how many units are produced. She concludes that the terminology seems to be backward. Explain why her explanation appears to be incorrect. 2. Define foxed cost and variable cost and give an example of each.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A basic belief of variable costing is that period costs should be currently expensed. What is thebasic rationale behind this procedure?a. Period costs are uncontrollable and should not be charged to a specific product.b. Period costs are generally immaterial in amount and the cost of assigning the amountsto specific products would outweigh the benefits.c. Allocation of period costs is arbitrary at best and could lead in erroneous decisions bymanagement.d. Period costs will occur whether or not production occurs and so it is improper toallocate these costs to production and defer a current cost of doing business.
Match each definition (See picture) with related terms below: -Capacity -Common Fixed Costs -Complementary Products -Constrained Resources -Direct Fixed Cost -Idle Capacity -Incremental Analysis -Segment Margin -Substitute Products -None of these are correct
Please explain why the option is correct and why the other options are incorrect
PLEASE ANSWER ALL Write “True” if the statement is true and write “False” if the statement is false. If volume increases, both total variables and total fixed costs will increase. Decrease in the level of activity will cause total variable and total fixed costs to decrease. When graphed, total variable costs and total fixed costs are both assumed to be linear withinthe relevant range.
Please provide this Question solution with explanation and Proper solution
d
Marginal costing is a technique that distinguishes between variable costs and fixed costs. In this approach to costing, only the variable costs of production are charged to cost units. Marginal costing and the concept of contribution are fundamental to the breakeven analysis or 'cost-volume-profit' (CVP) technique. Required: (a) Explain the concept of contribution and its importance to the CVP technique. (b) Describe the nature of each of the 'dropping a product or service' and 'special contract' decisions for which the CVP technique can be useful. (c) Critically evaluate the CVP technique and explain the limitations of its use in the context of both the different interpretations offered by the economist's model of CVP and other limitations.
Which of the following statements is true? I. Incremental analysis is an analytical approach that focuses only on those revenues and costs that will not change as a result of a decision. II. When expressed on a per unit basis, fixed costs can mislead decision makers into thinking of them as variable costs. II. To estimate what the profit will be at various levels of sales volume, multiply the number of units to be sold above or below the break-even point by the unit contribution margin. Statements I and III are true. Statements II and III are true. All of the statements are true. None of the statements are true.
Which of the following is not a potential advantage of variable costing relative absorptioncosting?a. Net income computed under variable costing is unaffected by changes productionlevels.b. It is easier to understand the impact of fixed and variable costs on computation of netincome when variable costing is used.c. The use of variable costing is consistent with cost-volume-profit analysis.d. Net income computed under variable costing is not closely tied to changes in sales level.
Which of the following is true of fixed and variable costs? Volume changes will not change the relationship between fixed and variable costs. Fixed costs are fixed in total, but vary per unit; variable costs vary in total, but are fixed per unit. As sales increase, the contribution margin percentage increases. O The relationship between sales, variable costs, and the contribution margin does not change when the sales price per unit changes. The contribution margin is what remains after fixed costs have been subtracted from total sales.
Which one of the following statement is not correct? O Both fixed and variable costs influence short-term decision-making. O Short-term decision-making is all about analysing those costs that will change as a result of taking a particular action. O Opportunity costs are only considered when resources are limited. O Break-even analysis is used to determine how many units of a product or a service a business has to sell to cover all its costs.
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