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There are many different areas of accounting. Managerial Accounting is one of the many branches of study. Managerial Accounting is the process of identifying, measuring, analyzing, interpreting, and communicating information in pursuit of an organization’s goals. Using the data collected from this analysis helps a business make better decisions and smarter ones by measuring all of the financial information.
Fixed costs are costs that do not change as sales activity go up and down and Variable costs are costs that vary with the level of output. In the case of the assignment, Item 1 Raw Materials is the variable costs because the cost of livestock depends on supply and demand. And Item 2, Building Rent is fixed because there usually is a lease contract and is locked for a block of time, example 5 year lease. Therefore the cost for the rent will not vary from month to month.
In this assignment we are running a restaurant that serves hamburgers. As I described earlier the meat is the variable costs and the building rent is the fixed cost. In the below chart I have calculated the annual cost and the cost per unit if our restaurant was to sell 1000, 6000, and 8000 units:
1000 units sold Annual Cost Cost per unit 6000 Units Sold Annual Cost Cost per unit 8000 Units Sold Annual Cost Cost per unit
Raw Materials $650.00 $0.65 Raw Materials $3,900.00 $0.65 Raw Materials &nbs ...