We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

# The Fixed Costs Per Unit And The Variable Calculation Accounting Essay

The expression for ciphering the above is the undermentioned high low for the fabrication cost of the association football company

The Soccer Ball: High low ( fabricating costs ) and based on the tabular array provided above the consequences are

We will write a custom essay on The Fixed Costs Per Unit And The Variable Calculation Accounting specifically for you
for only \$16.38 \$13.9/page

Order now

= RM 3.25 per cost variable

Entire Fixed Cost = Total Cost ‘ Total Variable Cost

= RM 36,430 ‘ 3.25 ‘ 7,000 )

= RM 36,430 ‘ 22,750 = RM 13,680

Entire Fixed Cost = Total Cost ‘ Total Variable Cost

= RM 36,430 ‘ ( 3.25 ‘ 7,000 )

=RM 13,680

The Selling Costss for The association football company

The Soccer Ball: High depression ( Marketing costs ) and based on the tabular array provided above the consequences are

( RM 65,600 ‘ RM 48,000 ) / ( 7000 ‘ 4800 )

= RM 8.00

Entire Fixed Cost = Total Cost ‘ Total Variable Cost

‘ RM 65,600 ‘ ( RM 8 ‘ 7000 )

‘ = RM 9,600

The consequences

1. Based on the above consequences the entire variable cost for per unit of association football ball would be ( RM 3.25 + RM 8.00 ) which is RM 11.25.

2. Based on the above consequences the entire Fixed cost for per unit of association football ball would be

( RM 13,680+ RM 9,600 ) which is RM 23,280

A1b ) the tennis ball fixed and variable costs per unit

The Tennis Ball: High low ( fabricating costs ) and based on the tabular array provided above the consequences are

( RM 8820 ‘ RM 8,160 ) / ( 9800 ‘ 6800 )

= RM.22/ unit

Entire Fixed Cost = Total Cost ‘ Total Variable Cost

‘ RM 65,600 ‘ ( RM.22 ‘ 9,800 )

‘ = RM 7,664

The Tennis Ball: High depression ( Marketing costs ) and based on the tabular array provided above the consequences are

( RM27,000 ‘ RM 21,000 ) / ( 9800 ‘ 6800 )

= RM 2/ unit

Entire Fixed Cost = Total Cost ‘ Total Variable Cost

‘ RM 27,000 ‘ ( RM 2 ‘ 9,800 )

‘ = RM 7,400

1. Based on the above consequences the entire variable cost for per unit of Tennis ball would be ( RM.22 + RM 2.00 ) which is RM 2.22

2. Based on the above consequences the entire Fixed cost for per unit of Tennis ball would be

( RM 7,664+ RM 7,400 ) which is RM 15,064

The disadvantages of utilizing a high ‘ low method are as follows.

1. The high low terminal method is really clip devouring one, it requires a batch of clip to identify in the information.

2. The method can non be applied in topographic points where there is a big sum of informations to be used

3. The use of two utmost informations points is an other draw back in the method.

4. The consequences largely rely on the judgement of the individual executing the analysis.

The cost volume analysis for both the companies can be calculated utilizing the below expression

The interruption even /unit can be calculated by ( Entire Fixed Costs ) / ( Price ‘ VC per unit )

For the Soccer ball

= ( RM23,280 ) / ( RM 20 ‘ RM11.25 ) = RM 2660-/-

For the Tennis ball

= ( RM 15064 ) / ( RM 3 ‘ 2.22 ) = RM 19,313-/-

Product Price Unit VC Unit CM The Package Package CM

Soccer Ball

Tennis Ball

RM 20

RM 3 11.25

2.22 8.75

0.78 128

181 1,120

141.18

Entire 1,261.2

Break Even Point for Package = ( RM 23,280 + RM 15,064+RM 130,000 ) /1261.2

= 133.47

Breakeven point for association football ball = 133.47 Ten 128 = 17084 ( Rounded )

Breakeven point for Tennis ball = 133.47 X 181 = 24158. ( Rounded )

Income statement

Soccer ball Tennis ball Sum

The sale ( 20 ‘17,084 ) 341,680 ( 3 ‘ 24,158 ) 72,474 414,154

V.C ( 11.25 ‘ 17,084 ) 192,195 ( 2.22 ‘ 24,158 ) 53630 245,825

C.M 149,485 18844 168,329

F.C 168,344

safety border for association football balls per unit = 10,000 ‘ 2,660 = 7340 units

Safety border for association football balls = 20 ‘ 7340 = 146,800

safety Margin for tennis balls per unit =30,000 ‘ 19,312 = 10688 units

safety border for tennis balls = 3 ‘ 10688 = 32,064

Entire border of unit = 18,028

So the Entire border = 178,864

F.C for association football balls = ( RM 13,680 ‘ 10 % ) + RM 13,680 + RM 9,600 = RM 24,648

V.C for association football balls = ( RM 3.25 ‘ 10 % ) + RM 3.25 + RM8 = RM 11.58

Product Price Unit V.C Unit C.M Package Package CM

Soccer Balls 20 11.58 8.42 128 1077.8

Tennis Balls 3 2.22 0.78 181 141.2

Entire Package 1219

The Breakeven point = ( RM 500,000+RM24,648+15,064 ) /1219 = 443

Breakeven point for Soccer Balls = 443 ‘ 128 = 56704

Breakeven point for Tennis Balls = 443 ‘ 181 = 80183

By enabling to cipher the cost of the resources sacrificed or forgone in production of a trade good, comptrollers can accomplish a specific aim to assistance with decision-making. For illustration, costs can find the merchandising monetary value of a merchandise. If the cost of doing that specific merchandise is well high, so it is natural for the direction to raise the monetary value of that merchandise in order to do a satisfied net income. If a concern requires the purchase of a new machinery to increase it ‘s end product but the short-run financess are used for these purchases, this may do working capital jobs. In consequence, the costs of buying new machinery determine the budgeting control of a house. Economists frequently assess the cost of something in footings of the foregone option, the chance cost. For illustration, the cost of buying new machinery with short-run financess will ensue in the house being able to increase its end product, nevertheless it will cut down its liquidness place.

Efficaciously, costs non merely find the gross and net income of the concern, it provides information for directors in direction accounting with assistance to decision-making ( Marcouse, 2003 ) . In dividing each cost harmonizing to how it behaves, the ability to foretell how costs will alter or respond to the alterations in the degree of concern activity or volume can be examined. The categorization of costs will be explained as follows:

‘ Variable costs

‘ Fixed costs

‘ Semi-fixed costs

‘ Semi-variable costs

Variable costs

Variable costs ‘are those that move straight relative to activity ( one unit consequences in RM 1 of variable cost, two units result in RM 2 of variable cost ‘ ) ‘ ( Dyson, 2001, p.375 ) . They represent payments made for the usage of inputs such as labor, fuel and natural stuffs and if our maker doubled end product so these costs would lift significantly and proportionally. There would be excess costs for the extra natural stuffs and fuel which would be required. Besides, more labors would most probably be required, incurring excess costs in the signifier of rewards.

Fixed costs

Fixed costs are ‘costs which do non change with altering degrees of activity, for illustration, mill rent, insurance and rates ” ( Glautier and Underdown, 2001, p.402 ) this means that, when the sale end product rises, fixed costs remain the same. However, the cost per unit of a merchandise reduces as sale end product rises. This is because the cost can be more spread over. An illustration is our new Surrey Quays Factory rent imposed this twelvemonth ‘ no affair how much an activity degree additions, the cost of the rent will stay the same regardless. But, suppose the rent was RM 250 per hebdomad fixed and sale end product within that hebdomad increased from 200 units to 500 units ; its original cost per unit was RM 1.25 but with its addition end product of 500 units, cost per unit falls to RM 0.50.

READ:  Does TV Affect American Culture Essay

Fixed costs, by definition, ‘stay unchanged over declared scopes in the volume of production ‘ ( Wood and Sangster, 2005, p55 ) but if production additions above a certain figure, so what may be considered as a fixed cost of leasing the mill could alter. The concern might necessitate to lease extra premises to fit demand as it increases. It is hence required for the ‘stated scopes ‘ to be moderately concise, so that what are considered fixed costs, are ‘costs which are fixed in the short term ‘ . ( Wood and Sangster, 2005 ) The ground for this is because ‘a alteration would non usually go on in the short term ‘ . From the illustration above, if the demand of extra premises were required due to the addition in gross revenues end product, it would still take a piece to lease and put up these new premises before production can get down.

Semi-fixed costs

Semi-fixed costs are costs composed of a mixture of fixed and variable constituents basically it is a fixed cost that increases in stairss. In the earlier illustration of the rent as a fixed cost, it can be understood that this behavior can be classified as a semi-fixed cost, since the addition of end product outside the scope would ensue in the addition in rent of extra infinite.

Semi-variable costs

A semi-variable cost is ‘a cost incorporating both fixed and variable constituents and which is therefore partially affected by a alteration in the degree of activity, but non in direct proportion. ‘ ( Davies, 2002, p.284 ) Examples of such costs include telephone measure, Internet use and electricity measures.

Choose Type of service

Choose writer quality

Page count

1 page 275 words

Order Essay Writing

\$13.9 Order Now Sara from Artscolumbia

Hi there, would you like to get such an essay? How about receiving a customized one?
Check it out goo.gl/Crty7Tt

The Fixed Costs Per Unit And The Variable Calculation Accounting Essay
Artscolumbia Artscolumbia
The expression for ciphering the above is the undermentioned high low for the fabrication cost of the association football companyThe Soccer Ball: High low ( fabricating costs ) and based on the tabular array provided above the consequences are= RM 3.25 per cost variableEntire Fixed Cost = Total Cost ' Total Variable Cost= RM 36,430 ' 3.25 ' 7,000 )= RM 36,430 ' 22,750 = RM 13,680Entire Fixed Cost = Total Cost ' Total Variable Cost= RM 36,
2018-10-23 18:57:41 \$ 13.900 2018-12-31
artscolumbia.org
In stock
Rated 5/5 based on 1 customer reviews