Variable cost

workings (Prime cost (direct costs) – To max 3 marks): Direct costs are cost objects that are directly attributable to the finished product, these can be direct materials, direct labour and direct expenses related to the production of the finished product. Prime cost is the total of all direct costs (material, labour and expenses). Quantity x price rate = total E.g. for machining department ‘Carom’: 450 x 12 = 5,400 1,200 x 8 = 9,600 2,230+5,400+9,600=17,230 Total prime cost for Order 2169…

Tofino truck business on Douglas College New Westminster campus The Tacofino food truck initially started in Tofino (Mearns, 2012). After two years of success, the food truck business was started at different locations, including Vancouver. The main goal of this food truck is to provide health and fresh food to people at reasonable prices. Building around this core goal, the menu has expanded with consumer demand to include cookies and drinks. Tacos and burritos offer a tasty blend of healthy…

impact the law of diminishing marginal returns has on both marginal cost and average total cost MARGINAL COST Marginal cost is a total cost to the company to produce one more product. This cost changes depending on how many products the company aims to produce. Changes in production may increase or decrease the marginal cost due to the marginal cost including all costs such as materials, labour, infrastructure. Marginal cost diagram has a U-shaped curve as a result of increasing and then…

Costs of Production Netflix operating income for 2104 was over $5.5M, which was in part due to the increase to the monthly service fee for subscribers and the increase in domestic and international streaming memberships. The company has a plethora of expenses, streaming content rights, licensing, acquisition of streaming content, streaming delivery expenses customer service, payment processing fees, and advertising. Fixed costs are costs that do not change no matter how much product the…

the production of adipic acid. They are the production from cyclohexane using catalyst, phenol and benzene via cyclohexene process. Even though these three routes have very different characteristics and cost distributions, ranging from the high raw material costs but comparatively low capital costs for the phenol-based route. Figure 2.1 represent all kind of processes involves in order to produce adipic acid. Three routes of processes are shown in that figure which are commercially…

1.0 Introduction CVP also known as Cost-Volume Profit analysis is a method used to calculate and determine break-even point of cost and volume of goods in a business and for management control (Kim Tan, 2011). This is better known as when total revenue equals to total costs and managers find this analysis useful when determining short-term business descisions. When a company hits break-even point, there will be no profit and no losses. Break-even is what most new start up companies want to…

calculate the unit costs by mentioning the costs type of each of them. So, first, the costs types must be clarified. The types of costs are as follows (Accounting for Management, 2017): - Variable Costs are that costs that change as the volume of production changes and are related to production units, such as the cost of materials used in manufacturing. The total value of the variable cost increases with the increase in the volume of production, and vice versa; - Fixed Costs are the costs that…

the costs associated with receiving the revenue. Break-even analysis calculates what is known as a margin of safety, the amount that revenues exceed the break-even point. This is the amount that revenues can fall while still staying above the break-even point. This technique based on categorising production cost between variable cost and fixed cost. Assumption The break-even analysis is depending on these several assumptions: All costs are classified as variable and fixed cost. Variable cost is…

information about costs for planning and control decisions. 2. Direct materials are not usually easily traced to a product. 3. A variable cost changes in proportion to changes in the volume in activity. 4. 34. Product costs are expenditures necessary and integral to finished products. 5. Cost concepts such as variable, fixed, mixed, direct and indirect apply only to manufacturers and…

sensitivity analysis – the variable cost of high investment +10%. a) How sensitive is the optimal solution to changes in this variable? It is sensitive enough that when adding 10% to the variable cost of the high investment strategy that the optimal strategy shifts from high automation investment to low automation investment. b) What do you notice with regard to the slope? The slope of the high investment option is negative, which tells us that as we increase the variable cost of the…