variable / fixed costs

Question 1

what is a fixed costs

Answer 1

costs that do not change in relation to production volume

Question 2

what is a variable cost

Answer 2

costs that do change in relation to product volume

Question 3

what is the nature of a fixed costs

Answer 3

time related - costs remain constant for a period of

Question 4

what is the nature of a variable costs

Answer 4

volume related - costs change with change in production volume

Question 5

what is the impact when the production changes

Answer 5

with fixed costs the cost stays the same and variable costs increase or decrease in sync with production volume

Question 6

what are the examples of fixed costs

Answer 6

rent

insurance

depreciation

fixed labuor

Question 7

what are examples of variable costs

Answer 7

direct materials

• sugar, packaging

direct labour

• production staff

Question 8

what is a cost driver

Answer 8

is defined as any activity that causes the organization to incur a variable cost

Question 9

what is total cost

Answer 9

is the sum of all fixed costs (the total fixed costs) and all variable costs (the total variable cost

Question 10

what is the average fixed cost formula

Answer 10

per-unit cost = total fixed costs / total number of units produced

Question 11

what is the average variable cost formula

Answer 11

per-unit cost = total variable costs / total number of units produced

Question 12

what is the variable cost of a graph

Answer 12

rise of the line / run of the line = y2 – y1 / x2 – x1