Discussion 100 words ONLY

Accounting discussion. Need to respond to this with 100-200 words. Anything relating to the discussion. Needs to be done within a hour please. Due in a hour can you please help? no plagerism please and if you use a source can you please put down refernce thank you.

 

Below is the dicussion: ALL YOU HAVE TO DO IS RESPOND TO THIS 100-200 words like a discussion. 

 

Cost equation:  y = a + bx or direct material = fixed cost + slope of line(units produced)

Y = $10000 + $5x

Y = $10000/(1.25) + $4.25(13,500)

Y = $7500 + $57375

Y = $64,875

A fixed cost is a cost “that remains the same in total, but vary per unit, when production volume changes” (Sawyers, Jackson & Jenkins, 2013, p. 92).  An example of a fixed cost would be rent.  To explain, if a shoe company’s rent was $5,000 per month, and the company produced 1,000 shoes in January, and only 850 shoes in February, the fixed cost would be spread across 1000 shoes in January ($5 per shoe), and spread across 850 shoes in February ($5.88 per shoe). 

A variable cost is the opposite.  The cost per unit stays the same, but changes in total in proportion to volume.  An example of a variable cost is direct materials.  If  it costs the shoe company $10 in direct materials for every shoe; then in January direct materials cost $10,000, and in February direct materials cost $8,500.  The cost varied per month based on the total volume produced. 

A mixed cost is a cost that includes both a fixed and variable cost component.  This makes it difficult to determine the different costs unless you first separate the costs into it’s own components.  For example, utilities that have a base rate, plus an additional cost per unit used above and beyond the allotted amount. 

The article I am referencing is regarding the impact of higher fixed costs, lower variable costs on the cost behavior and cost rigidity. 

 

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