It is important so business managers can make more successful decisions and facilitate problem solving and decision making.
Answer:
Variable costs are costs that vary with production. If production rises, the variable cost rises.
Fixed cost are costs that do not vary with production.
The time frame and contracts allows for distinction between fixed and variable cost in the short run.
in the short run, some costs of production cannot be changed for various reasons. Some of the reasons include, supply contract and Labour laws. Due to labour contracts, it might be difficult if not impossible to change wages paid to workers or fire workers. This makes wages fixed in the short run.
Some costs can be varied easily, for example if sales are low, shipping cost would reduce because the amount of orders are smaller.
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Fixed costs include:
advertising expenditures
interest on company-issued bonds
payments for raw materials
Real estate tax
Executive salary
insurance premiums
wage payments
depreciation and obsolescence charges
rental payments on leased office machinery
Variable costs include :
fuel
shipping charges
sales taxes
All costs are variable in the long run because in the long run production decisions which appeared fixed can be changed. For example, Labour contract can end and the firm can decide to adjust or retain the contract in line with the current economic situation. The firm can decide to move to a cheaper location and reduce rental cost.
Explanation:
Answer:
(A) Kleiner Merchandising Company:
Goods available for sale = $24,500
Cost of goods sold = $17,900
Gross profit = $3,600
Net income = $1,550
(B) Krug Service Company:
Net income = $16,300
Explanation:
(A) Kleiner Merchandising Company:
Goods available for sale:
= Beginning inventory + Net purchases
= $11,000 + $13,500
= $24,500
Cost of goods sold:
= Goods available for sale - Ending inventory
= $24,500 - $6,600
= $17,900
Gross profit = Net sales - Cost of goods sold
= $21,500 - $17,900
= $3,600
(b) Kleiner Merchandising Company:
Gross profit = $3,600
Net income = Gross profit - Expenses
= $3,600 - 2,050
= $1,550
Krug Service Company:
Net income = Revenues - Expenses
= $26,000 - $9,700
= $16,300
New goods or Services or Improvement in offering goods or services.
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Innovation is the process and outcome of creating something new, which is also of value.
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Answer:
there can be no answer without a proper question
