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yes it is an example of fixed cost
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When is fixed cost relevant in decision making?
When there will be change in fixed cost of business then at that time fixed cost will be relevant cost For Example if acquiring new machinery will reduce the amount of fixed expense in that case fixed cost is also relevant.
What is cost behavior?
Cost behaviour is the relationship between an activity and its cost. There are several different types of cost behaviours as I will demonstrate:Variable Cost:Costs that changes in total according to the activity level but have a fixed per unit cost. An example of this is raw material: if you are a shoe producing company, for each shoe produced, you will need one lace, so the cost of the last is variable depending on the amount of shoes product. The cost of the lace itself is fixed, but the total cost of production is variable.Fixed Cost: Costs that remains unchanged, regardless of the level of activity. An example of this is depreciation on buildings: regardless of how much production happening within the business, the amount of depreciation does not change. The per-unit depreciation cost decline with each additional unit produced, but the total cost of depreciation does not change.Step variable cost:Costs that are generally variable, but are fixed for a small range - items that are incrementally purchased and consumed. An example of this is a part time worker in a restaurant, when activity exceeds a certain range, another waitress needs to be scheduled, but a marginal increase in customers does not require another waitress. That is, an additional waitress can service another range of customers before another waitress needs to be scheduled.Step fixed cost:Costs that are fixed over a wide range but changes after a certain range. An example of this is the cost of indirect labour: a full time manager can oversee the factory for a certain range of activity before s/he can no longer handle it and thus a new full time manager or assistant manager needs to be hired to help. These managers are paid a salary thus the amount they are paid are fixed in that sense.Mixed cost: Some costs exhibit characteristics of both fixed and variable. An example of this is your phone bill. Each month you pay a fixed amount, but when you make a long distance phone call for example (assuming that it is not included in your monthly service), you will pay a charge per minute which is a variable cost.
Is it true that fix cost remains same when output increases?
The real answer is it depends, ultimately all costs are variable even those costs that would initially appear fixed. Take for example business rates, these are set for the year and will remain the same regardless of the change in volume of the output, however should the output need to rise above the capacity of the existing business premises additional premises or even new premises would need to be acquired and with it a new level of fixed cost. This is sometimes described as step fixed cost, i.e. the cost remains at the same level until a step change is required and then the costs are again fixed at this new level until another step change is required
Why is it important to consider marginal benefits and costs you do a cost benefit analysis?
Marginal cost at each level of production includes any additional costs required to produce the next unit. If producing extra vehicles requires building a new factory, the marginal cost of those extra vehicles includes the cost of the new factory....BOSS
What is the meaning of operating leverage describe it?
Operating leverage is the degree to which cost within a company is fixed. Fixed costs are costs that do not vary with sales. For example, the salary of a manager on a contract is fixed; that is regardless of the production level of a company the manager's pay would not change. Another example is rent, regardless of how much items are sold the rent for a store does not change. With this said, a company with a high operating leverage (in other words high fixed cost) have a high risk because it magnifies the effects of profit depending on sales. This could be measured by computing the degree of operating leverage (DOL) which is the percentage change in profit given a 1 percent change in sales.An example from my Finance textbook (Fundamentals of Corporate Finance) shows a nice table that compares a high fixed cost company (high operating leverage) with a high variable cost company (low operating leverage) given different states of sales. So the following table is a replication of that table and not my own.High Fixed Cost (High Operating Leverage)High Variable Cost(Low Operating Leverage)Sales:SlumpNormalBoomSlumpNormalBoomSales130001600019000130001600019000- VC105631300015438109201344015960- FC200020002000156015601560- Dep.450450450450450450= Profit-135501112705501030VC = variable cost; FC = fixed cost; Dep = deprecation; Profit = before taxAs you can see that with a high operating leverage, the changes from a $3000 change in sales is more than the change from a company with a low operating leverage. This could be captured through DOL as well.DOL = (% change in profits) / (% change in sales)Where % change = (New value - old value) / (old value)If we look at the normal to boom situations:For the high fixed cost the percentage change in profits is 102.20% and the percentage change in sales is 18.75% DOL is as followed:DOL = 102.20/ 18.75 = 5.45For the high variable company the percentage change in profits is 87.30% and the percentage change in sales is 18.75% DOL is as followed:DOL = 87.30/ 18.75 = 4.65Thus the higher the DOL the more fixed cost a company has and the more risk it assumes if the sales slump. But it also means that when sales boom, the higher operating leveraged company will profit merrily!
When is fixed cost relevant in decision making?
When there will be change in fixed cost of business then at that time fixed cost will be relevant cost For Example if acquiring new machinery will reduce the amount of fixed expense in that case fixed cost is also relevant.
What is an example of capital expenditure?
If we are launching a new factory and buy some machine than whats is deprisation cost of opex
How much will it cost for an ipod touch 4g to get fixed?
so you have an idea, is cheaper to get a new one than having it fixed!
What is cost behavior?
Cost behaviour is the relationship between an activity and its cost. There are several different types of cost behaviours as I will demonstrate:Variable Cost:Costs that changes in total according to the activity level but have a fixed per unit cost. An example of this is raw material: if you are a shoe producing company, for each shoe produced, you will need one lace, so the cost of the last is variable depending on the amount of shoes product. The cost of the lace itself is fixed, but the total cost of production is variable.Fixed Cost: Costs that remains unchanged, regardless of the level of activity. An example of this is depreciation on buildings: regardless of how much production happening within the business, the amount of depreciation does not change. The per-unit depreciation cost decline with each additional unit produced, but the total cost of depreciation does not change.Step variable cost:Costs that are generally variable, but are fixed for a small range - items that are incrementally purchased and consumed. An example of this is a part time worker in a restaurant, when activity exceeds a certain range, another waitress needs to be scheduled, but a marginal increase in customers does not require another waitress. That is, an additional waitress can service another range of customers before another waitress needs to be scheduled.Step fixed cost:Costs that are fixed over a wide range but changes after a certain range. An example of this is the cost of indirect labour: a full time manager can oversee the factory for a certain range of activity before s/he can no longer handle it and thus a new full time manager or assistant manager needs to be hired to help. These managers are paid a salary thus the amount they are paid are fixed in that sense.Mixed cost: Some costs exhibit characteristics of both fixed and variable. An example of this is your phone bill. Each month you pay a fixed amount, but when you make a long distance phone call for example (assuming that it is not included in your monthly service), you will pay a charge per minute which is a variable cost.
How much will another factory amp will cost.?
Around 240.00 Better Off Installing A New One It Will Cost Less
Is it true that fix cost remains same when output increases?
The real answer is it depends, ultimately all costs are variable even those costs that would initially appear fixed. Take for example business rates, these are set for the year and will remain the same regardless of the change in volume of the output, however should the output need to rise above the capacity of the existing business premises additional premises or even new premises would need to be acquired and with it a new level of fixed cost. This is sometimes described as step fixed cost, i.e. the cost remains at the same level until a step change is required and then the costs are again fixed at this new level until another step change is required
Why is it important to consider marginal benefits and costs you do a cost benefit analysis?
Marginal cost at each level of production includes any additional costs required to produce the next unit. If producing extra vehicles requires building a new factory, the marginal cost of those extra vehicles includes the cost of the new factory....BOSS
How much does it cost to get a playstation 2 fixed at gamestop?
You don't get your PS2 fixed at Gamestop you trade in or donate your broken one and buy a new $100 or reconditioned one $50-60
Is there a letter factory in New York?
There is a new letter factory in new york
What is least cost avoider?
The least cost avoider is the actor who can act to prevent a loss at the lowest cost. Assume a factory is polluting the air in a residential neighborhood. If it is cheaper for the factory to install a scrubber, move, or stop operations than it is for the residents to move to a new location or otherwise avoid the pollution, then the factory is the least cost avoider. If it is cheaper for the residents to move away from the nuisance, they are the least cost avoiders. Check out Ronald Coase and Guido Calabresi for more.
How much does it cost to get nails fixed?
if u just want a quick polish change (remove color, file, and new polish) most places cost $8-$12
What is the difference between a factory invoice and a dealer invoice when shopping for a new car?
The factory invoice is the total cost of the car that the dealer pays without taking any of the incentives or discounts received from the manufacture. The dealership invoice, is the total-cost with all discounts applied.
