Are costs that remain the same in total dollar amount as the activity base changes?
Fixed costs are costs that remain the same in total dollar amount as the activity base changes. Cost per unit changes inversely to changes in the activity base. Total cost remains the same regardless of changes in the activity base.
What is a cost that changes with the level of activity?
Fixed costs will remain fixed, and variable costs will change in direct relationship with fluctuations in the level of activity, only within a certain range of activity—the relevant range. Outside this range, fixed costs can alter and variable costs may not continue at a constant amount per unit of output. 1.
What type of cost remains the same in total as the volume changes?
What type of cost remains the same as the volume changes? Cost 2 is a fixed cost because as the number of units produced changes total costs remain the same and per unit costs change.
What is the term for the total of all costs that vary with the level of output?
The total variable cost is simply the quantity of output multiplied by the variable cost per unit of output: Total Variable Cost = Total Quantity of Output X Variable Cost Per Unit of Output.
What effect does the increase in fixed costs have on the break-even units?
The break-even point will increase by any of the following: An increase in the amount of the company's fixed costs/expenses. An increase in the per unit variable costs/expenses.
What effect does the increase in fixed costs have on the break-even units Decrease Increase No effect None of these choices are correct?
What effect does the increase in fixed costs have on the break-even units? None of these choices are correct. If a company decides to increase the selling price of its product, what is its effect on break-even point? None of these choices are correct.
Why are fixed costs constant?
A fixed cost is a cost that remains constant; it does not change with the output level of goods and services. It is an operating expense of a business, but it is independent of business activity. An example of fixed cost is a rent payment.
What is fixed costs and variable costs?
Variable costs change based on the amount of output produced. Variable costs may include labor, commissions, and raw materials. Fixed costs remain the same regardless of production output. Fixed costs may include lease and rental payments, insurance, and interest payments.
What is variable and fixed cost?
Variable costs change based on the amount of output produced. Variable costs may include labor, commissions, and raw materials. Fixed costs remain the same regardless of production output. Fixed costs may include lease and rental payments, insurance, and interest payments.
What are semi-variable costs?
What is a Semi-Variable Cost? A semi-variable cost, also known as a semi-fixed cost or a mixed cost, is a cost composed of a mixture of both fixed and variable components. Costs are fixed for a set level of production or consumption, and become variable after this production level is exceeded.
What is meant by a fixed cost?
Fixed costs are costs that do not change when sales or production volumes increase or decrease. This is because they are not directly associated with manufacturing a product or delivering a service. As a result, fixed costs are considered to be indirect costs.
What is the meaning of breakeven?
Definition of breakeven (Entry 1 of 2) : the point at which cost and income are equal and there is neither profit nor loss also : a financial result reflecting neither profit nor loss.
Which of the following is an example of a cost that remains the same in total as the number of units produced changes?
Variable costs are costs that remain constant in total dollar amount as the level of activity changes. Variable costs are costs that vary on a per-unit basis with changes in the activity level. A production supervisor's salary that does not vary with the number of units produced is an example of a fixed cost.
How does increasing fixed cost affect the break-even point?
The break-even point will increase by any of the following: An increase in the amount of the company's fixed costs/expenses. An increase in the per unit variable costs/expenses.
What fixed costs mean?
Fixed costs are costs that do not change when sales or production volumes increase or decrease. This is because they are not directly associated with manufacturing a product or delivering a service. As a result, fixed costs are considered to be indirect costs.
What are fixed costs also known as?
Fixed costs are also known as overhead costs, period costs or supplementary costs. Variable costs are also referred to as prime costs or direct costs as it directly affects the output levels. Nature. Fixed costs are time-related i.e. they remain constant for a period of time.
What is fixed and variable?
Companies incur two types of production costs: variable and fixed costs. Variable costs change based on the amount of output produced. Variable costs may include labor, commissions, and raw materials. Fixed costs remain the same regardless of production output.
What are fixed and flexible expenses?
Fixed expenses generally cost the same amount each month (such as rent, mortgage payments, or car payments), while variable expenses change from month to month (dining out, medical expenses, groceries, or anything you buy from a store).
What is semi fixed and semi-variable cost?
A semi-variable cost, also known as a semi-fixed cost or a mixed cost, is a cost composed of a mixture of both fixed and variable components. Costs are fixed for a set level of production or consumption, and become variable after this production level is exceeded.
What is differential cost?
Differential cost refers to the difference between the cost of two alternative decisions. The cost occurs when a business faces several similar options, and a choice must be made by picking one option and dropping the other.
What are implicit costs?
What Is an Implicit Cost? An implicit cost is any cost that has already occurred but not necessarily shown or reported as a separate expense. It represents an opportunity cost that arises when a company uses internal resources toward a project without any explicit compensation for the utilization of resources.
What is fixed and variable cost?
Key Takeaways Variable costs change based on the amount of output produced. Variable costs may include labor, commissions, and raw materials. Fixed costs remain the same regardless of production output. Fixed costs may include lease and rental payments, insurance, and interest payments.
What are variable costs?
Variable costs are any expenses that change based on how much a company produces and sells. This means that variable costs increase as production rises and decrease as production falls. Some of the most common types of variable costs include labor, utility expenses, commissions, and raw materials.
What are fixed costs and variable costs?
Variable costs change based on the amount of output produced. Variable costs may include labor, commissions, and raw materials. Fixed costs remain the same regardless of production output. Fixed costs may include lease and rental payments, insurance, and interest payments.
What are fixed costs examples?
Fixed costs tend to be costs that are based on time rather than the quantity produced or sold by your business. Examples of fixed costs are rent and lease costs, salaries, utility bills, insurance, and loan repayments. Some kinds of taxes, like business licenses, are also fixed costs.
What are fixed variable costs?
Businesses incur two types of costs: fixed costs and variable costs. Fixed costs remain the same throughout a specific period. Variable costs can increase or decrease based on the output of the business. Examples of fixed costs include rent, taxes, and insurance.
What’s a discretionary expense?
A discretionary expense is a cost that a business or household can survive without, if necessary. Discretionary expenses are often defined as nonessential spending. This means a business or household is still able to maintain itself even if all discretionary consumer spending stops.
What is semi-fixed?
A semi-variable cost, also known as a semi-fixed cost or a mixed cost, is a cost composed of a mixture of both fixed and variable components. Costs are fixed for a set level of production or consumption, and become variable after this production level is exceeded.
Is differential cost the same as incremental cost?
Definition of Incremental Cost An incremental cost is the difference in total costs as the result of a change in some activity. Incremental costs are also referred to as the differential costs and they may be the relevant costs for certain short run decisions involving two alternatives.
What is explicit and implicit?
Explicit describes something that is very clear and without vagueness or ambiguity. Implicit often functions as the opposite, referring to something that is understood, but not described clearly or directly, and often using implication or assumption.