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Chapter 5 powerpoint Material Type: Notes; Class: Managerial Accounting; Subject: Accounting; University: Pittsburg State University; Term: Forever 1989;
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ยฉ 2010 The McGraw-Hill Companies, Inc.
Chapter 5
Minutes Talked
Total Overage Charges on Cell
Phone Bill
Minutes Talked
Per Minute Overage Charge
The proportion of variable costs differs across organizations. For example...
A public utility like Florida A public utility like Florida Power and Light, Power and Light, with large investments in with large investments in equipment, will tend to have equipment, will tend to have fewer fewer variable costs.variable costs.
A public utility like Florida A public utility like Florida Power and Light, Power and Light, with large investments in with large investments in equipment, will tend to have equipment, will tend to have fewer fewer variable costs.variable costs.
A manufacturing company A manufacturing company like Black and Decker like Black and Decker will often have will often have manymany variable costs. variable costs.
A manufacturing company A manufacturing company like Black and Decker like Black and Decker will often have will often have manymany variable costs. variable costs.
A merchandising company A merchandising company like Wal-Mart like Wal-Mart usually has a usually has a highhigh proportion proportion of variable costs,of variable costs, like cost of sales. like cost of sales.
A merchandising company A merchandising company like Wal-Mart like Wal-Mart usually has a usually has a highhigh proportion proportion of variable costs,of variable costs, like cost of sales. like cost of sales.
Some service companies Some service companies have have highhigh variable costs,variable costs, while other service while other service companies have companies have highhigh fixed costs. fixed costs.
Some service companies Some service companies have have highhigh variable costs,variable costs, while other service while other service companies have companies have highhigh fixed costs. fixed costs.
Volume
Cost
Volume
Cost
Volume
Cost
Summary of Variable and Fixed Cost Behavior Cost In Total Per Unit
Variable Total variable cost is Variable cost per unit remains proportional to the activity the same over wide ranges level within the relevant range. of activity. Total fixed costs remain the same even when the activity Fixed cost per unit goes Fixed level changes within the down as activity level goes up. relevant range.
Cost In Total Per Unit
Variable Total variable cost is Variable cost per unit remains proportional to the activity the same over wide ranges level within the relevant range. of activity. Total fixed costs remain the same even when the activity Average fixed costs per unit Fixed level changes within the decrease as the activity relevant range. level increases.
Number of Minutes Used within Monthly Plan
Cost Per Cell Phone Call
In France , Germany , China , and Japan , management has little flexibility in adjusting the size of the labor force. Labor costs are more fixed in nature.
In France , Germany , China , and Japan , management has little flexibility in adjusting the size of the labor force. Labor costs are more fixed in nature.
In the United States and the United Kingdom , management has greater latitude. Labor costs are more variable in nature.
In the United States and the United Kingdom , management has greater latitude. Labor costs are more variable in nature.
Within countries managers can view labor costs differently depending upon their strategy. Most companies in the United States continue to view direct labor as a variable cost.
Within countries managers can view labor costs differently depending upon their strategy. Most companies in the
United States continue to view direct labor as a variable cost.