Managerial Accounting
Managerial Accounting
5th Edition
ISBN: 9781259176494
Author: John J Wild, Ken Shaw Accounting Professor
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 10, Problem 1E

Fill in each of the blanks below with the correct term.

  1. A ______ arises from a past decision and cannot be avoided or changed; it is irrelevant to future decisions.
  2. ______ refer to the incremental revenue generated from taking one particular action over another.
  3. Relevant costs are also known as _______.
  4. An _______ requires a future outlay of cash and is relevant for current and future decision making.
  5. An ________ is the potential benefit lost by taking a specific action when two or more alternative choices are available.

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Determine the total fixed costs of these accounting question
Perreth Drycleaners has capacity to clean up to 5,000 garments per month. Requirements 1. Complete the schedule below for the three volumes shown. 2. Why does the average cost per garment change? 3. Suppose the owner, Dale Perreth, erroneously uses the average cost per unit at full capacity to predict total costs at a volume of 2,000 garments. Would he overestimate or underestimate his total costs? By how much? Requirement 1. Complete the following schedule for the three volumes shown. (Round all unit costs to the nearest cent and all total costs to the nearest whole dollar.) Total variable costs Total fixed costs Total operating costs Variable cost per garment Fixed cost per garment 2,000 Garments 3,500 Garments 5,000 Garments $ 2,800 2.00 Average cost per garment Requirement 2. Why does the average cost per garment change? The average cost per garment changes as volume changes, due to the component of the dry cleaner's costs. The cost per unit decreases as volume , while the variable…
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Managerial Accounting

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