Help to solve cost is classified as being semi-variable

This topic has 2 replies, 3 voices, and was last updated 10 years ago by mansoor.

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December 4, 2015 at 2:41 pm #287551
ericasiewyongjie
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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
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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
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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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