Identify And Classify Costs:
Muhtasari
Before a business can set a price, judge a product or decide whether to keep making something, it must know its costs, and not all costs behave the same way. Some stay the same whatever you produce; others rise with every extra unit. Telling them apart is the foundation of business decisions.
In this lesson you will learn to classify costs as fixed, variable, total and average, with worked examples, and then to use cost data to make simple decisions, such as setting a price or deciding whether to stop or continue production.
Malengo
- Classifying costs using examples, e.g. fixed, variable, average, total
- Use cost data to help make simple cost-based decisions, e.g. to stop production or continue
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- Which is a fixed cost for a factory? A. raw materials B. piece-rate wages C. factory rent D. packaging per unit Answer: C
- Fixed costs of $20,000 and variable costs of $35,000 give a total cost of: A. $15,000 B. $35,000 C. $55,000 D. $700,000,000 Answer: C
- Average cost is calculated as: A. total cost times output B. total cost divided by output C. fixed cost minus variable cost D. revenue divided by price Answer: B
- Total cost $80,000 and output 4,000 units gives an average cost of: A. $2 B. $20 C. $200 D. $320,000 Answer: B
- A variable cost is one that: A. never changes B. changes as output changes C. equals total revenue D. is paid only once Answer: B
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