Describe how total variable costs and unit variable costs behave with changes in the level of activity.

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Answer 1

Textbook Question

Chapter 20, Problem 1DQ

Describe how total variable costs and unit variable costs behave with changes in the level of activity.

Expert Solution & Answer

To determine

Describe the behavior of the total variable costs and unit variable costs with changes in the level of activity.

Explanation of Solution

Cost Behavior: It refers to the method in which a cost changes with respect to the changes in its related activities. This method helps the management in estimating costs for decision making and predict future profits.

Describe the behavior of the total variable costs and unit variable costs with changes in the level of activity as follows:

The total variable costs changes proportionately with respect to the changes in the level of activity. However, the unit variable costs remains constant irrespective to the changes in the level of activity.

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Coronado Fire, Inc. manufactures steel cylinders and nozzles for two models of fire extinguishers: (1) a home fire extinguisher and (2) a commercial fire extinguisher. The home model is a high-volume (54,000 units), half-gallon cylinder that holds 2 1/2 pounds of multi- purpose dry chemical at 480 PSI. The commercial model is a low-volume (10,200 units), two-gallon cylinder that holds 10 pounds of multi-purpose dry chemical at 390 PSI. Both products require 1.5 hours of direct labor for completion. Therefore, total annual direct labor hours are 96,300 or [1.5 hours x (54,000+10,200)]. Estimated annual manufacturing overhead is $1,566,090. Thus, the predetermined overhead rate is $16.26 or ($1,566,090 ÷ 96,300) per direct labor hour. The direct materials cost per unit is $18.50 for the home model and $26.50 for the commercial model. The direct labor cost is $19 per unit for both the home and the commercial models. The company's managers identified six activity cost pools and related…

Answer 2

Textbook Question

Chapter 20, Problem 1DQ

Describe how total variable costs and unit variable costs behave with changes in the level of activity.

Expert Solution & Answer

To determine

Describe the behavior of the total variable costs and unit variable costs with changes in the level of activity.

Explanation of Solution

Cost Behavior: It refers to the method in which a cost changes with respect to the changes in its related activities. This method helps the management in estimating costs for decision making and predict future profits.

Describe the behavior of the total variable costs and unit variable costs with changes in the level of activity as follows:

The total variable costs changes proportionately with respect to the changes in the level of activity. However, the unit variable costs remains constant irrespective to the changes in the level of activity.

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Answer 3

Textbook Question

Chapter 20, Problem 1DQ

Describe how total variable costs and unit variable costs behave with changes in the level of activity.

Expert Solution & Answer

To determine

Describe the behavior of the total variable costs and unit variable costs with changes in the level of activity.

Explanation of Solution

Cost Behavior: It refers to the method in which a cost changes with respect to the changes in its related activities. This method helps the management in estimating costs for decision making and predict future profits.

Describe the behavior of the total variable costs and unit variable costs with changes in the level of activity as follows:

The total variable costs changes proportionately with respect to the changes in the level of activity. However, the unit variable costs remains constant irrespective to the changes in the level of activity.

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Answer 4

Textbook Question

Chapter 20, Problem 1DQ

Describe how total variable costs and unit variable costs behave with changes in the level of activity.

Expert Solution & Answer

To determine

Describe the behavior of the total variable costs and unit variable costs with changes in the level of activity.

Explanation of Solution

Cost Behavior: It refers to the method in which a cost changes with respect to the changes in its related activities. This method helps the management in estimating costs for decision making and predict future profits.

Describe the behavior of the total variable costs and unit variable costs with changes in the level of activity as follows:

The total variable costs changes proportionately with respect to the changes in the level of activity. However, the unit variable costs remains constant irrespective to the changes in the level of activity.

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Answer 5

Textbook Question

Answer 6

Textbook Question

Answer 7

Expert Solution & Answer

To determine

Describe the behavior of the total variable costs and unit variable costs with changes in the level of activity.

Explanation of Solution

Cost Behavior: It refers to the method in which a cost changes with respect to the changes in its related activities. This method helps the management in estimating costs for decision making and predict future profits.

Describe the behavior of the total variable costs and unit variable costs with changes in the level of activity as follows:

The total variable costs changes proportionately with respect to the changes in the level of activity. However, the unit variable costs remains constant irrespective to the changes in the level of activity.

Answer 8

Expert Solution & Answer

To determine

Describe the behavior of the total variable costs and unit variable costs with changes in the level of activity.

Explanation of Solution

Cost Behavior: It refers to the method in which a cost changes with respect to the changes in its related activities. This method helps the management in estimating costs for decision making and predict future profits.

Describe the behavior of the total variable costs and unit variable costs with changes in the level of activity as follows:

The total variable costs changes proportionately with respect to the changes in the level of activity. However, the unit variable costs remains constant irrespective to the changes in the level of activity.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

To determine

Describe the behavior of the total variable costs and unit variable costs with changes in the level of activity.

Answer 12

Explanation of Solution

Cost Behavior: It refers to the method in which a cost changes with respect to the changes in its related activities. This method helps the management in estimating costs for decision making and predict future profits.

Describe the behavior of the total variable costs and unit variable costs with changes in the level of activity as follows:

The total variable costs changes proportionately with respect to the changes in the level of activity. However, the unit variable costs remains constant irrespective to the changes in the level of activity.

Answer 13

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Describe how total variable costs and unit variable costs behave with changes in the level of activity.

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