I am confused in two questions.
Belton Park Resort (march 2019)
Bit and Pieces (june 2009)
In belton park, we have semi-variable cost of Power. In this, we are not taking fixed component as relevant because they have to come.
I do not understand what is the reason because power cost are cost which have to occur if something is used. Like electricity and gas. They have standing charge but electricity is treated completely zero which is a senseless thing.
In bit and pieces, we have machine cost as mixed cost. In this, we are taking fixed component as relevant.
Here we have fixed component so why are we taking it as relevant. We should take it as irrelevant as above e.g. machine depreciation costs.
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Relevant Costing
3y ago#1For the hotel, the question says that they pay a fixed $2,200 per month for gas and a fixed $8,000 per month for electricity. Therefore there is no extra cost of keeping the hotel open apart from the remaining $9,800 for gas which will increase by 50% in January.
There is no mention of there being a standing charge. The question specifically says that the $10,200 a month is fixed (and this is quite common in the UK anyway).
In Bits and Pieces there are no machine costs because they do not have any machines (they are a store), so I am not sure which costs you are referring to. Other than the purchase costs, the only costs are lighting, heating and staff costs, and they are all given in the questions as being charged on an hourly basis.
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