Find effect on semi-variable costs for 10% decrease in the current year sales of Incorporation R compared to last year sales.

Question

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Answer 1

Question

Chapter 20, Problem 1STQ

To determine

Find effect on semi-variable costs for 10% decrease in the current year sales of Incorporation R compared to last year sales.

Expert Solution & Answer

Answer to Problem 1STQ

a) Decrease in total, but increase as a percentage of net sales.

Explanation of Solution

Semi-variable costs: These costs are fixed up to certain level of activity; over that level costs will change according to the change in the activity (less proportionate to that activity).

Total semi variable costs will increase/(decrease) along with the increase/(decrease) in the activity due to variable cost element. But semi variable costs percentage will increase less than proportionate to the increase / (decrease) in the activity because of fixed cost element.

For example:

Assume that the last year sales are $100,000 and semi variable cost are $20,000 (50% fixed, that is $10,000 variable component and $10,000 is the fixed component). Percentage of sales for semi-variable costs is 20%($20,000 ÷ $100,000).

During the current year, 10% sales are decreased when compared to the last year. Then, the current year sales are $90,000($100,000 − [$100,000 × 10%]). The semi-variable costs (variable component) are also decreased by 10% due to a decrease in the sales. The current year’s semi variable costs are $19,000 ($9,000 is variable component and $10,000 is the fixed component). The percentage of sales for semi-variable costs is increased from 20% to 21%($19,000 ÷ $90,000).

The above explanation is matching with the option (a) Decrease in total, but increase as a percentage of net sales. Thus, option (a) is the suitable answer. Options (b), (c), and (d) are incorrect answers.

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Answer 2

Question

Chapter 20, Problem 1STQ

To determine

Find effect on semi-variable costs for 10% decrease in the current year sales of Incorporation R compared to last year sales.

Expert Solution & Answer

Answer to Problem 1STQ

a) Decrease in total, but increase as a percentage of net sales.

Explanation of Solution

Semi-variable costs: These costs are fixed up to certain level of activity; over that level costs will change according to the change in the activity (less proportionate to that activity).

Total semi variable costs will increase/(decrease) along with the increase/(decrease) in the activity due to variable cost element. But semi variable costs percentage will increase less than proportionate to the increase / (decrease) in the activity because of fixed cost element.

For example:

Assume that the last year sales are $100,000 and semi variable cost are $20,000 (50% fixed, that is $10,000 variable component and $10,000 is the fixed component). Percentage of sales for semi-variable costs is 20%($20,000 ÷ $100,000).

During the current year, 10% sales are decreased when compared to the last year. Then, the current year sales are $90,000($100,000 − [$100,000 × 10%]). The semi-variable costs (variable component) are also decreased by 10% due to a decrease in the sales. The current year’s semi variable costs are $19,000 ($9,000 is variable component and $10,000 is the fixed component). The percentage of sales for semi-variable costs is increased from 20% to 21%($19,000 ÷ $90,000).

The above explanation is matching with the option (a) Decrease in total, but increase as a percentage of net sales. Thus, option (a) is the suitable answer. Options (b), (c), and (d) are incorrect answers.

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Answer 3

Question

Chapter 20, Problem 1STQ

To determine

Find effect on semi-variable costs for 10% decrease in the current year sales of Incorporation R compared to last year sales.

Expert Solution & Answer

Answer to Problem 1STQ

a) Decrease in total, but increase as a percentage of net sales.

Explanation of Solution

Semi-variable costs: These costs are fixed up to certain level of activity; over that level costs will change according to the change in the activity (less proportionate to that activity).

Total semi variable costs will increase/(decrease) along with the increase/(decrease) in the activity due to variable cost element. But semi variable costs percentage will increase less than proportionate to the increase / (decrease) in the activity because of fixed cost element.

For example:

Assume that the last year sales are $100,000 and semi variable cost are $20,000 (50% fixed, that is $10,000 variable component and $10,000 is the fixed component). Percentage of sales for semi-variable costs is 20%($20,000 ÷ $100,000).

During the current year, 10% sales are decreased when compared to the last year. Then, the current year sales are $90,000($100,000 − [$100,000 × 10%]). The semi-variable costs (variable component) are also decreased by 10% due to a decrease in the sales. The current year’s semi variable costs are $19,000 ($9,000 is variable component and $10,000 is the fixed component). The percentage of sales for semi-variable costs is increased from 20% to 21%($19,000 ÷ $90,000).

The above explanation is matching with the option (a) Decrease in total, but increase as a percentage of net sales. Thus, option (a) is the suitable answer. Options (b), (c), and (d) are incorrect answers.

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Answer 4

Question

Chapter 20, Problem 1STQ

To determine

Find effect on semi-variable costs for 10% decrease in the current year sales of Incorporation R compared to last year sales.

Expert Solution & Answer

Answer to Problem 1STQ

a) Decrease in total, but increase as a percentage of net sales.

Explanation of Solution

Semi-variable costs: These costs are fixed up to certain level of activity; over that level costs will change according to the change in the activity (less proportionate to that activity).

Total semi variable costs will increase/(decrease) along with the increase/(decrease) in the activity due to variable cost element. But semi variable costs percentage will increase less than proportionate to the increase / (decrease) in the activity because of fixed cost element.

For example:

Assume that the last year sales are $100,000 and semi variable cost are $20,000 (50% fixed, that is $10,000 variable component and $10,000 is the fixed component). Percentage of sales for semi-variable costs is 20%($20,000 ÷ $100,000).

During the current year, 10% sales are decreased when compared to the last year. Then, the current year sales are $90,000($100,000 − [$100,000 × 10%]). The semi-variable costs (variable component) are also decreased by 10% due to a decrease in the sales. The current year’s semi variable costs are $19,000 ($9,000 is variable component and $10,000 is the fixed component). The percentage of sales for semi-variable costs is increased from 20% to 21%($19,000 ÷ $90,000).

The above explanation is matching with the option (a) Decrease in total, but increase as a percentage of net sales. Thus, option (a) is the suitable answer. Options (b), (c), and (d) are incorrect answers.

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Answer 5

Chapter 20, Problem 1STQ

To determine

Find effect on semi-variable costs for 10% decrease in the current year sales of Incorporation R compared to last year sales.

Expert Solution & Answer

Answer to Problem 1STQ

a) Decrease in total, but increase as a percentage of net sales.

Explanation of Solution

Semi-variable costs: These costs are fixed up to certain level of activity; over that level costs will change according to the change in the activity (less proportionate to that activity).

Total semi variable costs will increase/(decrease) along with the increase/(decrease) in the activity due to variable cost element. But semi variable costs percentage will increase less than proportionate to the increase / (decrease) in the activity because of fixed cost element.

For example:

Assume that the last year sales are $100,000 and semi variable cost are $20,000 (50% fixed, that is $10,000 variable component and $10,000 is the fixed component). Percentage of sales for semi-variable costs is 20%($20,000 ÷ $100,000).

During the current year, 10% sales are decreased when compared to the last year. Then, the current year sales are $90,000($100,000 − [$100,000 × 10%]). The semi-variable costs (variable component) are also decreased by 10% due to a decrease in the sales. The current year’s semi variable costs are $19,000 ($9,000 is variable component and $10,000 is the fixed component). The percentage of sales for semi-variable costs is increased from 20% to 21%($19,000 ÷ $90,000).

The above explanation is matching with the option (a) Decrease in total, but increase as a percentage of net sales. Thus, option (a) is the suitable answer. Options (b), (c), and (d) are incorrect answers.

Answer 6

Chapter 20, Problem 1STQ

To determine

Find effect on semi-variable costs for 10% decrease in the current year sales of Incorporation R compared to last year sales.

Expert Solution & Answer

Answer to Problem 1STQ

a) Decrease in total, but increase as a percentage of net sales.

Explanation of Solution

Semi-variable costs: These costs are fixed up to certain level of activity; over that level costs will change according to the change in the activity (less proportionate to that activity).

Total semi variable costs will increase/(decrease) along with the increase/(decrease) in the activity due to variable cost element. But semi variable costs percentage will increase less than proportionate to the increase / (decrease) in the activity because of fixed cost element.

For example:

Assume that the last year sales are $100,000 and semi variable cost are $20,000 (50% fixed, that is $10,000 variable component and $10,000 is the fixed component). Percentage of sales for semi-variable costs is 20%($20,000 ÷ $100,000).

During the current year, 10% sales are decreased when compared to the last year. Then, the current year sales are $90,000($100,000 − [$100,000 × 10%]). The semi-variable costs (variable component) are also decreased by 10% due to a decrease in the sales. The current year’s semi variable costs are $19,000 ($9,000 is variable component and $10,000 is the fixed component). The percentage of sales for semi-variable costs is increased from 20% to 21%($19,000 ÷ $90,000).

The above explanation is matching with the option (a) Decrease in total, but increase as a percentage of net sales. Thus, option (a) is the suitable answer. Options (b), (c), and (d) are incorrect answers.

Answer 7

Chapter 20, Problem 1STQ

To determine

Find effect on semi-variable costs for 10% decrease in the current year sales of Incorporation R compared to last year sales.

Answer 8

Expert Solution & Answer

Answer to Problem 1STQ

a) Decrease in total, but increase as a percentage of net sales.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Semi-variable costs: These costs are fixed up to certain level of activity; over that level costs will change according to the change in the activity (less proportionate to that activity).

Total semi variable costs will increase/(decrease) along with the increase/(decrease) in the activity due to variable cost element. But semi variable costs percentage will increase less than proportionate to the increase / (decrease) in the activity because of fixed cost element.

For example:

Assume that the last year sales are $100,000 and semi variable cost are $20,000 (50% fixed, that is $10,000 variable component and $10,000 is the fixed component). Percentage of sales for semi-variable costs is 20%($20,000 ÷ $100,000).

During the current year, 10% sales are decreased when compared to the last year. Then, the current year sales are $90,000($100,000 − [$100,000 × 10%]). The semi-variable costs (variable component) are also decreased by 10% due to a decrease in the sales. The current year’s semi variable costs are $19,000 ($9,000 is variable component and $10,000 is the fixed component). The percentage of sales for semi-variable costs is increased from 20% to 21%($19,000 ÷ $90,000).

The above explanation is matching with the option (a) Decrease in total, but increase as a percentage of net sales. Thus, option (a) is the suitable answer. Options (b), (c), and (d) are incorrect answers.

Answer 12

Ch. 20 - Prob. 1STQ Ch. 20 - Prob. 2STQ Ch. 20 - Prob. 3STQ Ch. 20 - Prob. 4STQ Ch. 20 - Prob. 5STQ Ch. 20 - Prob. 1DQ Ch. 20 - Prob. 2DQ Ch. 20 - Prob. 3DQ Ch. 20 - Prob. 4DQ Ch. 20 - 5. Define the relevant range of activity.

Find effect on semi-variable costs for 10% decrease in the current year sales of Incorporation R compared to last year sales.

Find effect on semi-variable costs for 10% decrease in the current year sales of Incorporation R compared to last year sales.

Answer to Problem 1STQ

Explanation of Solution

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Chapter 20 Solutions