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Help to solve cost is classified as being semi-variable

Forums › FIA Forums › MA2 Managing Costs and Finance Forums › Help to solve cost is classified as being semi-variable

  • This topic has 2 replies, 3 voices, and was last updated 9 years ago by mansoor.
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  • December 4, 2015 at 2:41 pm #287551
    ericasiewyongjie
    Member
    • Topics: 5
    • Replies: 1
    • ☆

    A particular cost is classified as being semi-variable.

    What is the effect on the TOTAL COST if activity increases by 20%?

    A.stay the same
    B.decreases by less than 20%
    C.increases by 20%
    D.increases by less than 20%

    December 5, 2015 at 12:13 pm #287818
    cindy999
    Member
    • Topics: 0
    • Replies: 2
    • ☆

    Assume the cost and calculate according to the increase or decrease of percentage
    Activity level : 100
    Variable per unit : $2
    Fixed : $500
    Total : $700

    Now do another set which activity level increase by 20%
    Activity level : 120
    Variable per unit : $2
    Fixed : $500
    Total : $740

    Then find the difference in total cost in %

    December 9, 2015 at 5:06 pm #289771
    mansoor
    Participant
    • Topics: 424
    • Replies: 542
    • ☆☆☆☆

    semi variable cost have a fixed part and a variable part. this means semi variable costs rise more sloly than variable costs.

    therefore the costs will rise but not as fast as 20%

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