chapter 5

chapter 5 - operate and can be use to estimate costs and...

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John Rubinetti AC12 2/14/08 3. The amount of activity level does not affect the amount of total fixed cost, because these costs are incurred no matter what the company’s activity level. On the other hand unit fixed costs vary inversely with activity in that as volume and activity increase, unit cost declines. 5. The relevant range, which is the range over which a company expects to operate during a year, is indispensible in cost behavior analysis. This is because the relevant range is where a company expects to
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Unformatted text preview: operate and can be use to estimate costs and can be useful as long as the company operates within the relevant range. 15. The margin of safety is another relationship used in CVP analysis and is the difference between actual or expected sales and sales at the break-even point. The margin of safety ratio for the company is $3,000 because they expect to sell 1250 items at $12 totaling in $15,000, and the break even in only $12,000....
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