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A particular cost is classified as being ‘semi variable ‘ , if activity increases by 10% . What will be happen to the cost per unit.
A increase
B reduce but not in proportion to the change in activity
C reduce in proportion to the change in activity
D remain constantI should think A
Telephone charges are often quoted as an example of a semi-variable cost. There is usually a fixed charge for the connection plus a charge based on consumption (variable).
If you make 10% more calls (ie activity up by 10%), the total cost will increase (A). It will not go up 10% because the connection charge is fixed.
semi variable means that the cost has a FIXED part and a VARIABLE part.
as activity increases, the FIXED COST PER UNIT will reduce.
and if u look at the VARIABLE COST, this remains constant on a per unit basis.
thus the combined effect will be that cost will go down but not in proportion to the activity.
answer is B
let me know the answer
Mansoor pleas send me the ma1 and fa1 past paper on my hammadbasit9@gmail.com
I’m very thankful to you .Could you send to me too? Thank you.
co.eklm0910@gmail.comWhat are the absorption costing n the marginal costing?
And what is the differnce between these topics?For MA 1 paper. FA 1 is also available there
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