Examples:
1.) Having a stain on your rug there's only so much you can get out before your damaging your rug with cleaner
2.) Babysitting and having the child miss there mom, there's only so much you can do to try to calm him/her down
3.) Watering plants, if you haven't watered plant in a long time so you give them extra water, if you keep giving the plant extra water it will eventually drown and die.
Answer:
The business manager should assume that the building expense is fixed.
Explanation:
Fixed costs are not correlated with the revenue levels. Within the relevant range, fixed costs remain constant. They do not vary with the activity levels as variable costs do. For example, a manufacturer must pay for rent, repairs and maintenance, and utility bills irrespective of the revenue levels at which it is operating. This is why the business manager always discovers that the building expense each month does not correlate with the revenue levels, unlike the product's variable costs.
Answer:
a. $60.
Explanation:
While computing the relevant cost in case of special order only the variable manufacturing cost is to be considered as it will be changed in special order case.
And the other cot like - fixed manufacturing, variable & fixed selling, traceable fixed administrative cost, etc are not relevant as it remains constant
These costs are not useful for decision making. Hence, it is to be ignored
