
Concept explainers
Fixed Cost:
It refers to the cost that does not get changed with the change in the output or production level. It remains same in totality but decrease per unit with the increase in output or the level of production. It is the cost that cannot be allocated to each product individual and that the company would incur at the zero level of production.
Variable Cost:
It refers to the costs that change with the change in the output or production level. This cost is directly related with the level of output. It increases with increase in output and decrease with the decrease in output but it remains same per unit irrespective to the increase or decrease in output. This is that cost which can be allocated to each product individually.
(1)
To identify:
The list costs that are variable for the hotel.
(2)
To identify:
The list costs that are fixed for the hotel.
(3)
To explain:
Whether the fixed cost or the variable cost is likely to be greater in case of hotel.
(4)
To explain:
The reason behind the discounts as high as 50% or more offered by the hotels during their low occupancy season.

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Chapter 19 Solutions
FINANC. MANGERIAL ACCT. W/CONNECT (LL)
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