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Unformatted text preview: Goods Sold.
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
For each radio produced, the total cost of the
clocks increases by $10:
If 2,000 radios are produced, the total cost of the
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).
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
activity: As volume increases, unit cost declines, and
Depreciation on buildings and equipment,
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.
- Winter '14