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Concept explainers
Introduction:
Fixed and variable costs:
Fixed costs are costs that remains constant and do not fluctuate with the change in activity volumes or production. The increase or decrease in activity volume or production does not impact the cost as the fixed cost is associated with the product. Indirect costs and factory
Variable costs are costs that fluctuates with the activity volume or production. The cost varies with the level of change in activity volume or production. Increase in activity or production leads to increase in total costs and decreased activity or production leads to reduction in total costs. Examples of variable costs include wages paid to labor, sales commission etc. Variable costs are helpful in decision-making process by managers in production process.
To state:
The classification of cost whether variable or fixed based on the description of product costs for the production of footballs.
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Chapter 18 Solutions
Connect Access Card for Fundamental Accounting Principles
- The Falcon Company has reported the following data: Item Amount Operating expenses $ 1,80,00 Cost of goods sold $ 5,20,00 Net sales $9,70,00 Interest expense $ 45,000 Gain on sale of $ 35,000 assets Income tax expense $95,000 What was Falcon's gross profit? A. $450,000 B. $380,000 C. $250,000 D. $520,000arrow_forwardTutor please provide answerarrow_forwardDetermine the PE ratio of this financial accounting questionarrow_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
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