## Fixed Cost Questions and Answers

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Suppose you manage a small business and notice that sales are high, but costs are higher. What areas would you look at changing to create a more profitable business?

Kamal Fatehl production manager of Kennesaw Manufacturing, finds his profit at $28,000 inadequate for expanding his business. The bank is insisting on an improved profit picture prior to approval o...

Microeconomics Pierre's Boulangerie used some fixed inputs and labor (and, curiously, nothing else) to produce lighter than air baguettes. This may seem unrealistic, but you might take comfort in n...

California Gardens, Inc., prewashes, shreds, and distributes a variety of salad rubes in 2-pound bags. Doug Voss, Operations VP, is considering a new Hi-Speed shredder to replace the old machine, r...

Auden makes three types of vitamin supplements, all of which require the use of encapsulating machines that have capacity of 10,000 hours. Information on the Auden makes three types of vitamin supp...

SAGE Inc. receives too many applications each year for the Global MBA program so they turn to their network of partners for assistance. Nothing in this world is free, of course, so their partners p...

A telephone call from Texas costs $1.00 for the first minute and $0.53 for each additional minute. How much will a 27-minute call cost?

You need to purchase a textbook for nursing school. The book cost $80.00, and the sales tax where you are purchasing the book is 8.25%. If you have $100, how much change will you receive back?

The cost of making 3 tables is $845. The cost of making 18 tables is $1,970. What is the cost per table?

You travel by subway to and from work, at a cost of $8 per day. how much can you save by buying a monthly pass for $80? assume a month has 20 work days.

You have developed the following pro forma income statement for your corporation: It represents the most recent year's operations, which ended yesterday. Your supervisor in the controller's office...

Distinguish among fixed cost, variable cost, total cost, and marginal cost?

Two (2) cell phone companies have different rate plans. Run fast has monthly charges $8 plus $8 per gig of data. B A &D's monthly charge is $15 plus $4 per gig of data. John's task is to determine...

Data from the duplicating department of a company for the last 2 months are as follows: Numberof copies made Duplicating Department's costs January 100,000 $8,500 February 150,000 9,500 What is th...

Measurements of non-avoidable fixed costs are related to what?

How is the proportion of fixed costs in a project's cost structure related to the sensitivity of EBITDA and EBIT to changes in revenue?

Various cost and sales data for Meriwell Company for the just completed year appear in the sheet below: Finished goods inventory, beginning $20,000 Finished goods inventory, ending $40,000 Adminis...

The Bernard Music Pavilion in downtown Chicago is a technologically sophisticated and uniquely designed performing arts venue that hosts live concerts attended by over half a million patrons a year...

SUNY Package Service (SUNYPS) offers overnight package delivery to Canadian business customers. SUNYPS has recently decided to expand its facilities to better satisfy current and projected demand....

Which of the following costs typically include both fixed and variable components? A. Direct materials B. Direct labor C. Factory overhead D. None of these

Say a company s total costs are $2,500,000 when 100,000 units are made. Of the total cost, $500,000 is fixed. Assume all volumes referenced in the question fall within the relevant range. a. What a...

As driver level increases in the relevant range, a fixed cost does not change Blank, but the fixed cost Blank becomes progressively smaller. A. per unit; per unit of cost driver B. in total; per...

If you were going into business and were going to sell a new high-tech product, what kind of costs would you have to consider before going into operation? What would be some of the fixed costs asso...

Rita Jekyll operates a sales booth in computer software trade shows, selling an accounting software package, Abacus. She purchases the package from a software company for $190 each. Booth space at...

The Do-Gooders a local student service organization has four different locations under consideration for constructing a new chapter house. The Chapter leader Ben E. Fishel, estimates that due to di...

At a recent board meeting, the president and CEO got into a heated argument about whether to shut down the firm's plant in Jackson. The Jackson plant current loses $60,000 monthly. The president of...

34,000 Units 47,000 Units Variable costs $153,000 ? Fixed costs $25,000 ? Mixed costs $16,000 ? Total costs $194,000 $260,500 Total mixed costs at 47,000 units would be?

Jeans's Fitness Club provides monthly memberships as well as personal training sessions. The personal trainers earn 50% of the revenue for all personal training sessions. The Fitness Club also sell...

Mary's yard is a mess. She needs to hire someone to prune her trees and shrubs. A landscaping service she calls quotes her a price of $15 consultation fee plus $8 an hour for the actual work. Mary'...

A multiconcept restaurant incorporates two or more restaurants, typically chains, under one roof. Sharing facilities reduces costs of both real estate and labor. The multi-concept restaurants typic...

Beth's Supplies manufactures building tiles in one plant, which has a practical capacity of 25,000 tiles. The variable cost of the tile is $9.00 per unit, and the fixed costs of the plant are $300,...

Rensing Groomers is in the dog-grooming business. Its operating costs are described by the following formulas: Grooming supplies (variable) y = $ 0 + $ 4 x Direct labor (variable) y = $ 0 + $ 13...

As part of their application for a loan to buy Lakeside Farm, a property they hope to develop as a bed-and-breakfast operation, the prospective owners have projected: Monthly fixed cost (loan paym...

^{125}I has a half-life time of 60 days. The purchase price of the source is composed of a fixed cost of $300 and a cost per mCi activity of $1. The source provides 100 counts/s/mCi. The minimum ac

A firm contemplating entering the market would need to invest $100 million to build a minimum efficient scale production plant (or about $10 million annually on an amortized basis). Such a plant co...

Hummingbird Company uses the product cost concept of applying the cost-plus approach to product pricing. The costs and expenses of producing 25,000 units of Product K are as follows: Hummingbird de...

Babe's Batting Cages had the following income statement in 2015: Sales $200,000 Operating costs excl. depr. & amort. $120,000 EBITDA $80,000 Depr. & Amort. $16,000 EBIT $64,000 Interest $2,000 EBT...

Farmer Smith rents 15 acres of wheatland and employs variable labor a/ Calculate the TC, VC, FC, AC, AVG, and MC. On a piece of graph paper, plot the AC and MC curves. b/ Assume that the price...

Borges Machine Shop, Inc., has a 1-year contract for the production of 250,000 gear housings for a new off-road vehicle. Owner Luis Borges hopes the contract will be extended and the volume increas...

Company must identify and classify the cost for making profitable pricing decision, discuss any 5 types of cost.

Electrician charges $50 a house call and $65 dollar an hour. The job is 6 hours long. Will it be cheaper for him to work 6 hours or 2 three-hour jobs?

Assume that a firm has determined its optimal output and finds that, under the most optimistic revenue assumptions, it will just break even. Under less optimistic assumptions, it will suffer a loss...

How can we find monthly cost in linear function?

Jessica Castillo had always been interested in food and cooking. After culinary school and several extensive apprentice stints with some of the best chefs in New York and a spectacular year in Lond...

a) The minimum efficient scale is the -smallest level of output needed to attain all economies of scale and minimum long-run average total cost. -only level of output where long-run average total...

Jay Company uses the total cost concept of applying the cost-plus approach to product pricing. The costs and expenses of producing and selling 38,400 units of Product E are as follows:

A utility company charges its residential customers a flat fee for electricity plus 8 cents for each kilowatt-hour (kWh) of electricity used. Last month, a customer used 400 kWh of electricity, and...

Describe fixed costs.

Complete the following table of short run fixed costs. Output (q) Total Fixed Cost (TFC) Average Fixed Costs (AFC) 1 $2,000 2 2,000 3 2,000 4 2,000 5 2,000

Solve the task below for L and K using the Lagrangian method (i.e constrained optimization). Given the following production function: q = 2K^{1/3} L^{1/2} where K is capital and L is amount of labo...

Define and know how to calculate fixed cost.

With the understanding of fixed and variable costs and what those mean to a business in both the short run and the long run, address the following questions in your analysis: Why does it makes sen...

A large law firm uses an average of 40 boxes of copier paper a day. The firm operates 260 days a yeA large law firm uses an average of 40 boxes of copier paper a day. The firm operates 260 days a y...

BeeGee Company, operating at full capacity, sold 150,000 units at a price of $116 per unit during the current year. Its income statement is as follows: Sales $17,400,000 Cost of goods sols 6,000...

Question 1: A tennis racquet manufacturer is negotiating lease on land to build a manufacturing plant. The price charged will be determined by p=$450-(0.1)D per tennis racquet. The manufacturer fac...

Consider this statement: In the long run, if I can cover my variable costs, I will continue to produce. If I cannot cover my variable costs, I will shut down. Is this statement accurate? Why or why...

Consider this statement: In the short run, if I can cover my variable costs, I will continue to produce, ignoring my fixed costs. If I cannot cover my variable costs, I will shut down to minimize l...

Describe the four possible capacity levels a firm must evaluate when deciding how to set budgeted fixed manufacturing cost rates, including the pros and cons of selecting each capacity level. Expla...

Maria shares a house with 4 others. She pays $500 rent per month plus her utilities. If the utilities cost a total of x dollars, how much more money, M, does maria owe Write an equation for how muc...

There is an initiation fee to join the River Country Club, as well as monthly dues. The total cost after 7 months' membership will be $3,125, and after 11/2 years will be $3,950. Find both the init...

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