Variable cost per unit. within the relevant range. will ________.

Please help with these questions!!
Variable cost per unit, within the relevant range,

Answer

General guidance

Concepts and reason

CVP Analysis: Cost volume profit analysis is generally termed as CVP analysis. It determines the effect of operating income and net income due to the change in the cost and output. In CVP, variable cost per unit is constant, and total fixed cost is constant. Marginal cost: Marginal cost is the change in the cost of production as output is changed. It is the cost altered by adding a single unit of goods or involving change in the service provided. Thus, the total cost of production changes.

Fundamentals

Relevant range: It is said to be the activity level that is bound with the minimum and the maximum amount. Within the boundry of the relevant range, certain revenues and the expenses will are expected to occur in same as expected, but outside the relevant range, it will differ. Cost: Cost is any value spent to produce a product or to render any service. The types of costs are fixed cost and variable cost. Fixed cost: Fixed cost is a cost that remains the same, irrespective of the increase or decrease in the value of goods or any services rendered. It is the cost paid by the company that does not depend on the activities concerned with the business. Variable cost: Variable cost is a cost that varies according to the output produced or any service rendered. It is the cost paid by the company that depends on the activities concerned with the business.

Step-by-step

Step 1 of 3

1) Justification for correct answer: Relevant range is said to be an activity that is bound with a minimum and a maximum amount within the relevant range. Certain revenues and the expenses can occur beyond the boundary, and those will differ. Thus, within the relevant range, the variable cost per unit will remain the same as the production level changes.

Part 1

Within the relevant range, the variable cost per unit will remain the same as the production level changes.


It is mentioned to determine the changes in the variable cost per unit within the relevant range. Thus, in the relevant range and the specific time period, the variable cost per unit will remains constant when the total amount of variable cost varies directly. Then, the proportion of the production level also changes.

Step 2 of 3

2) Justification for correct answer: The relevant range will refer to the limited span of the volume or the activity. When the budget is made for the future period, the assumptions will be made based on the relevant range. Thus, in the total fixed cost the relevant range will remain the same when the production level changes.

Part 2

In the total fixed cost, the relevant range will remain the same when the production level changes.


It is mentioned to determine the true behaviour of the total fixed cost within the relevant range. The relevant range will refer to the limited span of the volume or the activity. When the budget is made for the future period, the assumptions will be made based on the relevant range.

Step 3 of 3

3) Calculate the calling minutes of “A” used: Bill amount = (Minutes used x Per minute call +Fixed charge
$80=(Minutes used x $0.4)+$6
$80 - $6=(Minutes used x $0.4)
$74 =

Therefore, the calling minute used by “A” is 185 minutes.

Part 3

The calling minute used by “A” is 185 minutes.


It is mentioned to calculate the calling minutes of “A” used. Thus, it is determined by the formula, minutes used is multiplied with per minute call and added with the fixed charge. Therefore, the calling minute used by “A” is 185 minutes.

Answer

Part 1

Within the relevant range, the variable cost per unit will remain the same as the production level changes.

Part 2

In the total fixed cost, the relevant range will remain the same when the production level changes.

Part 3

The calling minute used by “A” is 185 minutes.

Leave a Comment