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1)
Introduction:
Variable and Fixed costs of Manufacture
- Variable costs refer to the costs of manufacture that have a direct co-relation with the volume of the goods manufactured, i.e. the costs increase with an increase in the goods produced. Examples are costs of direct material and direct labor.
Manufacturing costs are costs that are directly incurred in connection with manufacture of goods. Examples are Direct materials and ManufacturingOverhead
- Fixed costs refer to the costs of manufacture that have an inverse co-relation with the volume of the goods manufactured, i.e. the costs decrease with an increase in the goods produced. Examples are costs of factory rent,
depreciation on plant and equipment
High Low Method
• High low method is a method of determination and differentiation between variable and fixed costs in case of composite costs; in order to facilitate proper cost analysis, by comparing cost estimates for various quantities of goods manufactured.
• The High low method involves taking the highest estimate of costs for a particular activity level and lowest estimate of costs for a particular level and comparing the two in order to determine variable and fixed costs in case of composite costs.
• The differentiation between variable and fixed costs is essential from a contribution margin and breakeven point analysis and calculation perspective. However this method is only applicable when the costs consist of both variable and fixed elements of cost.
Variable cost per inspection
2)
Introduction:
Variable and Fixed costs of Manufacture
- Variable costs refer to the costs of manufacture that have a direct co-relation with the volume of the goods manufactured, i.e. the costs increase with an increase in the goods produced. Examples are costs of direct material and direct labor.
- Manufacturing costs are costs that are directly incurred in connection with manufacture of goods. Examples are Direct materials and Manufacturing Overhead
- Fixed costs refer to the costs of manufacture that have an inverse co-relation with the volume of the goods manufactured, i.e. the costs decrease with an increase in the goods produced. Examples are costs of factory rent, depreciation on plant and equipment
High Low Method
• High low method is a method of determination and differentiation between variable and fixed costs in case of composite costs; in order to facilitate proper cost analysis, by comparing cost estimates for various quantities of goods manufactured.
• The High low method involves taking the highest estimate of costs for a particular activity level and lowest estimate of costs for a particular level and comparing the two in order to determine variable and fixed costs in case of composite costs.
• The differentiation between variable and fixed costs is essential from a contribution margin and breakeven point analysis and calculation perspective. However this method is only applicable when the costs consist of both variable and fixed elements of cost.
Fixed cost per inspection
3)
Introduction:
Variable and Fixed costs of Manufacture
- Variable costs refer to the costs of manufacture that have a direct co-relation with the volume of the goods manufactured, i.e. the costs increase with an increase in the goods produced. Examples are costs of direct material and direct labor.
- Manufacturing costs are costs that are directly incurred in connection with manufacture of goods. Examples are Direct materials and Manufacturing Overhead
- Fixed costs refer to the costs of manufacture that have an inverse co-relation with the volume of the goods manufactured, i.e. the costs decrease with an increase in the goods produced. Examples are costs of factory rent, depreciation on plant and equipment
High Low Method
• High low method is a method of determination and differentiation between variable and fixed costs in case of composite costs; in order to facilitate proper cost analysis, by comparing cost estimates for various quantities of goods manufactured.
• The High low method involves taking the highest estimate of costs for a particular activity level and lowest estimate of costs for a particular level and comparing the two in order to determine variable and fixed costs in case of composite costs.
• The differentiation between variable and fixed costs is essential from a contribution margin and breakeven point analysis and calculation perspective. However this method is only applicable when the costs consist of both variable and fixed elements of cost.
Cost of 1200 inspections
4)
Introduction:
Variable and Fixed costs of Manufacture
- Variable costs refer to the costs of manufacture that have a direct co-relation with the volume of the goods manufactured, i.e. the costs increase with an increase in the goods produced. Examples are costs of direct material and direct labor.
- Manufacturing costs are costs that are directly incurred in connection with manufacture of goods. Examples are Direct materials and Manufacturing Overhead
- Fixed costs refer to the costs of manufacture that have an inverse co-relation with the volume of the goods manufactured, i.e. the costs decrease with an increase in the goods produced. Examples are costs of factory rent, depreciation on plant and equipment
High Low Method
• High low method is a method of determination and differentiation between variable and fixed costs in case of composite costs; in order to facilitate proper cost analysis, by comparing cost estimates for various quantities of goods manufactured.
• The High low method involves taking the highest estimate of costs for a particular activity level and lowest estimate of costs for a particular level and comparing the two in order to determine variable and fixed costs in case of composite costs.
• The differentiation between variable and fixed costs is essential from a contribution margin and breakeven point analysis and calculation perspective. However this method is only applicable when the costs consist of both variable and fixed elements of cost.
To Prepare:
Graph showing total costs incurred for inspections
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Chapter 21 Solutions
Horngren's Accounting, The Financial Chapters (11th Edition) - Standalone Book
- Mead Incorporated began operations in Year 1. Following is a series of transactions and events involving its long-term debt investments in available-for-sale securities. Year 1 January 20 Purchased Johnson & Johnson bonds for $20,500. February 9 Purchased Sony notes for $55,440. June 12 Purchased Mattel bonds for $40,500. December 31 Fair values for debt in the portfolio are Johnson & Johnson, $21,500; Sony, $52,500; and Mattel, $46,350. Year 2 April 15 Sold all of the Johnson & Johnson bonds for $23,500. July 5 Sold all of the Mattel bonds for $35,850. July 22 Purchased Sara Lee notes for $13,500. August 19 Purchased Kodak bonds for $15,300. December 31 Fair values for debt in the portfolio are Kodak, $17,325; Sara Lee, $12,000; and Sony, $60,000. Year 3 February 27 Purchased Microsoft bonds for $160,800. June 21 Sold all of the Sony notes for $57,600. June 30 Purchased Black & Decker bonds for $50,400. August 3 Sold all of the Sara…arrow_forwardWhat is the ending inventory?arrow_forwardMaple industries uses the straight line method solution general accounting questionarrow_forward
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