Total Variable Costs

5. Fixed costs can be discretionary or committed. Using your judgment based on the discussion in the case, identify which costs are likely to be discretionary. Assuming that management is able to decrease discretionary fixed costs by 10%, what would be the impact on Bridgestone’s break-even point revenues?

Each of them can be drilled down to the cost drivers in the categories above using the “bottoms-up” cost model (Exhibit 1).

c. Explain how the location of each curve graphed in question 7b would be altered if (1) total fixed cost had been $100

Since material cost is one of the key cost drivers for the production of the units, it is best to take

Explain the corresponding impact on total revenue for each of the three price ranges identified in part G.

A. The table below lists each category and states whether the cost is relevant, if it is an implicit or explicit cost, and if the cost has been properly calculated (note: company is currently operating at 65% capacity).

3. Using the variable costing method, which of the following costs are assigned to inventory?

Question 3: Identify all costs associated with this venture. Categorize these costs as fixed or variable.

3. For each of the individual overhead accounts at Bridgeton, do you believe the given cost is variable, fixed, or something else? Why? (Use information or evidence from the case to support your evaluation, if possible. For most of these costs, there is no single right answer from the case information, so the goal is to come up with a reasonable estimate.)

According to this method, every unit of the product is assigned all direct, fixed, and variable costs. This method includes the cost of direct materials and labor as well as a portion of the overhead costs associated with it in the final costing of every unit of the product.

unit, two types of costs are distinguished. Firstly the direct costs, consisting of the direct

8. I would like to remove allocated costs and fixed overheads and see what would be the variable cost. If this is done, you can see that the variable cost hovers around 7 FF. ( Not many of you have done this)

Cost of goods sold will continue to be an area that further increases as a result of management decisions. We estimate that COGS will increase from 42389.35 to 64621.89, which is an

All the costs by a company can be broken into two categories, fixed costs and variable costs. Costs that are independent of output are called fixed costs. Fixed costs remain constant throughout the relevant range and are usually considered sunk for the relevant range. Buildings and machinery are included inputs that cannot be adjusted in the short term. They are only fixed in relation to the quantity of production for a certain time period. The cost of all inputs is variable, in the long run.

Variable Cost per Unit = ( $59,000 − $38,000 ) ÷ ( 3,000 − 1,250 ) = $12 per unit