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Business Accounting Managerial Accounting

Differential costs and variable costs: Cost is an expense for the business, so the organization would plan to reduce it to increase profit, but differential costs are spent to get additional income by increase additional activity in the business. To determine: If only the variable cost considered as differential costs. Solution: No, Differential costs consist of both fixed cost and variable cost. Explanations: No, not agree, because the supplementary business activity is to generate revenue for the company so it includes variable and fixed costs, differential costs have both costs. Example XYZ company install additional new machine it would increase revenue for the company, the machine can produce a variable number of units so raw materials, wages paid comes under variable costs and depreciation , repairs and maintenance come under fixed costs. Conclusion: Most of the organization assessing the product performance by using differential cost concept, because it is increasingly a part of the revenue, so revenue generated process certainly incurs fixed costs and variable costs.

Differential costs and variable costs: Cost is an expense for the business, so the organization would plan to reduce it to increase profit, but differential costs are spent to get additional income by increase additional activity in the business. To determine: If only the variable cost considered as differential costs. Solution: No, Differential costs consist of both fixed cost and variable cost. Explanations: No, not agree, because the supplementary business activity is to generate revenue for the company so it includes variable and fixed costs, differential costs have both costs. Example XYZ company install additional new machine it would increase revenue for the company, the machine can produce a variable number of units so raw materials, wages paid comes under variable costs and depreciation , repairs and maintenance come under fixed costs. Conclusion: Most of the organization assessing the product performance by using differential cost concept, because it is increasingly a part of the revenue, so revenue generated process certainly incurs fixed costs and variable costs.

Managerial Accounting

Managerial Accounting

15th Edition

ISBN: 9780078025631

Author: Ray H Garrison, Eric Noreen, Peter C. Brewer Professor

Publisher: McGraw-Hill Education

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Chapter 2, Problem 16Q

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Chapter 2 Solutions

Managerial Accounting

Ch. 2.A - Prob. 1E Ch. 2.A - Prob. 2E Ch. 2.A - Prob. 3P Ch. 2.A - Prob. 4P Ch. 2.A - Prob. 5C Ch. 2.B - Prob. 1E Ch. 2.B - Prob. 2E Ch. 2.B - Prob. 3P Ch. 2.B - Prob. 4P Ch. 2 - Prob. 1Q

Ch. 2 - Define the following: (a) direct materials, (b)...Ch. 2 - Explain the difference between a product cost and...Ch. 2 - Distinguish between (a) a variable cost, (b) a...Ch. 2 - Prob. 5Q Ch. 2 - Define the following terms: (a) cost behavior and...Ch. 2 - What is meant by an activity base when dealing...Ch. 2 - Managers often assume a strictly linear...Ch. 2 - Distinguish between discretionary fixed costs and...Ch. 2 - Does the concept of the relevant range apply to...Ch. 2 - What is the major disadvantage of the high-low...Ch. 2 - Prob. 12Q Ch. 2 - Prob. 13Q Ch. 2 - What is the difference between a traditional...Ch. 2 - Prob. 15Q Ch. 2 - Prob. 16Q Ch. 2 - Prob. 17Q Ch. 2 - Prob. 1AE Ch. 2 - Prob. 2AE Ch. 2 - L01-2, L01-3, L01-4, L01-5, L01-6 Martinez...Ch. 2 - Prob. 1F15 Ch. 2 - L012, L013, L014, L015, L016 Martinez Company’s...Ch. 2 - L01–1, L01–2, L01–3, L01–4, L01–5, L01–6 Martinez...Ch. 2 - L01–1, L01–2, L01–3, L01–4, L01–5, L01–6 Martinez...Ch. 2 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6 Martinez...Ch. 2 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6 Martinez...Ch. 2 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6 Martinez...Ch. 2 - L01-2, L01-3, L01-4, L01-5, L01-6 Martinez...Ch. 2 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6 Martinez...Ch. 2 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6 Martinez...Ch. 2 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6 Martinez...Ch. 2 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6 Martinez...Ch. 2 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6 Martinez...Ch. 2 - L01-1, L01-2, L01-3, L01-4, L01-5, L01-6 Martinez...Ch. 2 - L01-2, L01-3, L01-4, L01-5, L01-6 Martinez...Ch. 2 - EXERCISE 1—1 Identifying Direct and Indirect Costs...Ch. 2 - EXERCISE 1-2 Classifying Manufacturing Costs LO1-2...Ch. 2 - EXERCISE 1-3 Classifying Costs as Product or...Ch. 2 - EXERCISE 14 Fixed and Variable Cost Behavior LO14...Ch. 2 - Prob. 5E Ch. 2 - EXERCISE 1—6 Traditional and Contribution Format...Ch. 2 - Prob. 7E Ch. 2 - Prob. 8E Ch. 2 - Prob. 9E Ch. 2 - Prob. 10E Ch. 2 - Prob. 11E Ch. 2 - EXERCISE 1-12 Product and Period Cost Flows LO1–3...Ch. 2 - Prob. 13E Ch. 2 - EXERCISE 2-14 High-Low Method: Predicting Cost...Ch. 2 - Prob. 15E Ch. 2 - Prob. 16P Ch. 2 - Prob. 17P Ch. 2 - PROBLEM 1-18 Direct and Indirect Costs; variable...Ch. 2 - Prob. 19P Ch. 2 - PROBLEM 2-20 High-Low Method; Predicting Cost...Ch. 2 - PROBLEM 2-21 Cost Classification [L02-1, L02-3,...Ch. 2 - Prob. 22P Ch. 2 - Prob. 23P Ch. 2 - Prob. 24P Ch. 2 - Prob. 25P Ch. 2 - Prob. 26C Ch. 2 - Prob. 27C

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