
Concept Introduction-Variable costs −
Variable costs are those costs which are directly proportionate with the volume of production. It varies with the level of production. If volume of production increases, variable costs will also increase and vice-versa.
Fixed costs-
Fixed costs are those costs which are fixed over a specific range of production. It remains fixed. It doesn't get changed with the volume of production.
Direct Costs-
Direct costs are those costs which are directly related to the production. It includes, direct material, direct labor, etc.
Indirect costs-
Indirect costs are those costs which are not directly related to the production. It includes, indirect material, indirect labor, etc. It includes variable and fixed costs which are not directly related to the production.
To Classify-To classify each product costs as either variable or fixed and direct costs or indirect costs.

Want to see the full answer?
Check out a sample textbook solution
Chapter 18 Solutions
Fundamental Accounting Principles
- Hamilton Manufacturing sells a single product. Its annual revenue is $1,500,000, and its profit is $75,000. Fixed costs amount to $325,000. Compute Hamilton's operating leverage.arrow_forwardWhat is the price earnings ratio of this financial accounting question?arrow_forwardPlease need answer the financial accounting questionarrow_forward
- Jensen Corp.'s $5 par value common stock is actively traded at a market value of $12 per share. Jensen issues 8,000 shares to purchase land advertised for sale at $105,000. Journalize the issuance of the stock in acquiring the land.arrow_forwardHello tutor please provide this question solution general accountingarrow_forwardPlease give me answer accountingarrow_forward
- 4. Galindo Long-Haul, Inc., is considering the purchase of a tractor-trailer that would cost $178,848, would have a useful life of 8 years, and would have no salvage value. The tractor- trailer would be used in the company's hauling business, resulting in additional net cash inflows of $36,000 per year. Galindo Long-Haul, Inc. has a cost of capital of 9%. What is the internal rate of return on the investment in the tractor-trailer? And is the investment acceptable for the company?arrow_forwardSolve this Financial Accounting Problemarrow_forwardKendrick Manufacturing Corp. (KMC) has total assets of $600 million, $80 million of which are cash. It has total debt of $250 million. If KMC repurchases $30 million of its stock, what changes will occur on its balance sheet? What will its new leverage ratio be? Helparrow_forward
- XYZ CORPORATION, WHICH APPLIES MANUFACTURING OVERHEAD ON THE BASIS OF MACHINE HOURS, HAS PROVIDED THE FOLLOWING DATA FOR ITS MOST RECENT YEAR OF OPERATIONS: ESTIMATED MANUFACTURING OVERHEAD = $420,000 •. • ESTIMATED MACHINE HOURS = 10,000 ACTUAL MANUFACTURING OVERHEAD = $425,000 ACTUAL MACHINE HOURS = 10,200 THE ESTIMATES WERE MADE AT THE BEGINNING OF THE YEAR TO COMPUTE THE PREDETERMINED OVERHEAD RATE. COMPUTE THE PREDETERMINED OVERHEAD RATE.arrow_forwardCan you please solve this financial accounting question?arrow_forward3. The management of an amusement park is considering purchasing a new ride for $95,000 that would have a useful life of 10 years. The company has estimated that the net present value of all cash flows except salvage value from the initial investment and annual cash inflows is ($4,853). The company's discount rate is 9%. What would the salvage value of the ride in 10 years need to be to make this investment attractive?arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education





