FINC 577 Chapter 5 Notes Outline

FINC 577 Chapter 5 Notes Outline

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Unformatted text preview: Goods Sold. Sales Commissions. FreightFreight-Out for a Merchandiser. Gasoline at an Airline Company. Chapter 5-7 Variable Costs – Example Damon Company manufactures radios that contain a $10 digital clock. The activity index is the number of radios produced. For each radio produced, the total cost of the clocks increases by $10: If 2,000 radios are produced, the total cost of the the clocks clocks is $20,000 (2,000 × $10). If 10,000 radios are produced, the total cost of the clocks is $100,000 (10,000 × $10). Chapter 5-8 Variable Variable Costs – Graphs Chapter 5-9 Fixed Costs Fixed costs are costs that remain the same in total regardless of changes in the activity level. Fixed costs per unit cost vary inversel with per ly wit activity: activity: As volume increases, unit cost declines, and vice versa. Examples include: Depreciation on buildings and equipment, Property taxes Insurance, and Rent. Chapter 5-10 Fixed Fixed Costs - Example Damon Company leases its productive facilities at a cost of $10,000 per month. Total fixed costs o...
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This document was uploaded on 01/19/2014.

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