If a firm has relatively high fixed costs compared with variable costs we can say the firm
Question:
If a firm has relatively high fixed costs compared with variable costs we can say the firm
a.
has high operating gearing
b.
has a low margin of safety
c.
has a high margin of safety
d.
is inefficient
The following information applies to questions 32 and 33
Klopi Limited manufactures toasters with a selling price of $179. The following financial information was obtained on manufacturing costs for the last six months:
Month | Units sold | Manufacturing costs ($ thousands) |
May 2020 | 240 | 40.2 |
June 2020 | 200 | 36.8 |
July 2020 | 240 | 42.2 |
August 2020 | 280 | 44.3 |
September 2020 | 360 | 54.4 |
October 2020 | 320 | 51.3 |
Question 32 (2 marks):
Estimate the variable manufacturing cost per toaster, based on the high-low method.
Question 33 (2 marks):
Estimate the fixed manufacturing cost per month, based on the high-low method.
Fundamentals of Cost Accounting
ISBN: 978-0077398194
3rd Edition
Authors: William Lanen, Shannon Anderson, Michael Maher