In addition included in the fixed costs is a figure of HK$1,000,000 which represents an apportionment of general overheads. The balance of the fixed costs are incremental fixed costs which are associated with the new project. The total machinery costs of the project in year 0 are estimated ...
These forecasts are before taking account of selling price inflation of 5·0% per year, variable cost inflation of 6·0% per year and fixed cost inflation of 3·5% per year. The fixed costs are incremental fixed costs which are associated with Project E. At the end of four years, machin...
Production and sales from the new machine are expected to be 100,000 units per year. Each unit can be sold for $16 per unit and will incur variable costs of $11 per unit. Incremental fixed costs arising from the operation of the machine will be $160,000 per year. Warden Co has an ...
Fixed costs are related to production and do not typically change. For example, thesalaryof a plantmanagergenerally remains the same whether the firm produces 200 or 800 units. The manufacturer still has to figure the plant manager's salary into its production costs. Variable costs, such as th...
When considering marginal costs,fixed costsare excluded unless the increase in output level pushes the company into a higher relevant range. In the example above, we assume that the company can manufacture up to 120 shoes. If this is the case, the marginal cost of $50 reflects onlyvariab...
If the factory currently produces less than 100,000 cups per day, the marginal cost for each additional cup is only $1. Fixed costs, such as machinery and facilities, are not included. However, if the factory is already working at full capacity, the marginal cost of producing more cups ma...
For example, fixed costs such as the actual salaries, depreciation, and property taxes are unlikely to increase because one more unit was produced. Related Questions What is the difference between a differential cost and an incremental cost? Are insurance premiums a fixed cost? What is the ...
The American conversation about high-speed rail has an internal debate that greatly bothers me, about whether investments should be incremental or not. An interview with the author of a new book about the Northeast Corridor reminded me of this; this is n
What are relevant costs? Give some examples. What are variable costs, fixed costs, and mixed costs? What is the effect on the break-even point when fixed costs, variable costs, and sales change? Give three examples of firms that are not significant users of cost management information and ...
In accounting, as production increases, fixed expenses in overhead are absorbed (spread) over more units of output, providing economies of scale and resulting in a lower average fixed cost per unit. But the marginal cost may or may not change due to fixed costs. Marginal cost depends on whe...