Respuesta :
Variable Costs - Variable costs are those cost that varies with the level of production of goods or services produced. If level of production increases than total variable costs will increase and if level of production decreases total variable costs will decrease. The per unit variable costs remain same with the change in level of production cost. Examples of variable costs are direct materials, direct labors etc. Total variable cost = Total quantity of units produced * Variable cost per unit
Fixed Costs - Fixed costs are those costs which does not change with change in the level of production, i.e., these costs in total remains same with the increase or decrease in production within a relevant range but per unit fixed cost change with change in the level of production.
Hours of Operating time
5,0000 6,000 7,000 8,000
Total Costs:
Variable Costs 20,000 24000 28,000 32,000
(4 per hour)
Fixed Costs 168,000 168,000 168,000 168,000
_____ _____ _____ _____
Total Costs 188,000 192,000 196,000 200,000
Costs per hour:
Variable Cost 4 4 4 4
Fixed Cost 33.60 28.00 24.00 21.00
Total cost 37.60 32.00 28.00 25.00
_______ ________ ________ _______
Calculations:
Total variable cost = Total quantity of units produced * Variable cost per unit
20,000 = 5,000 units * Variable cost per unit
Variable cost per unit = 20,000/5,000 units = 4.00 per unit
Variable cost for different level of production(in total):
5,000 units = 20,000
6,000 units = 4.00 per unit * 6,000 units = 24,000
7,000 units = 4.00 per unit * 7,000 units = 28,000
8,000 units = 4.00 per unit * 8,000 units = 32,000
Fixed cost for different level of production(per unit):
Per unit fixed cost = Total fixed cots/Total number of units produced
5,000 units = 168,000/5,000 units = 33.60 per unit
6,000 units = 168,000/6,000 units = 28.00 per unit
7,000 units = 168,000/7,000 units = 24.00 per unit
8,000 units = 168,000/8,000 units = 21.00 per unit
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