Question 1 The following schedule of costs is available: Schedule of costs 1,000 units 2,000 units Total
Question:
Question 1
The following schedule of costs is available:
Schedule of costs | ||
1,000 units | 2,000 units | |
Total variable costs | $3,000 | |
Total fixed costs | ||
Total operating costs | ||
Variable costs per unit | ||
Fixed cost per unit | $2.00 | |
Average cost per unit |
Required:
1. What is the total operating cost at 1,000 units, and what is the average cost per unit at 1,000 units?
2. What is the danger in using average cost to make predictions about costs at varying production levels?
3. What sorts of challenges would you have in making predictions of cost behavior in an accounting report that reports line items like Cost of goods sold, and Selling and Administrative expenses:
Income Statement | |||
Sales | $XXXX | ||
Cost of goods sold | XXXX | ||
Gross margin | XXXX | ||
Selling and Administrative expenses | XXXX | ||
Net income | XXXX | ||
Accounting Texts and Cases
ISBN: 978-1259097126
13th edition
Authors: Robert Anthony, David Hawkins, Kenneth Merchant