Why the price of a product can be lower than the unit cost, but not its variable cost 5

Fixed cost. It is invested upfront, and when it comes to re-decision-making, it is sometimes considered a sunk cost.

Don't think about it anymore.

Variable costs. It is the cost that will be incurred after the decision of the economic agent.

The product can be lower than the unit cost, which refers to the labor cost that can be put into the product immediately after the decision is sold.

and material expenses, even if they do not fully cover the loss of fixed costs.

However, it cannot be lower than its variable cost, which means that when the decision is implemented now, after the sale, even the wages and material costs that will be invested cannot be **.

Let's take Vanke's development as an example. In 1992, Wuhan Vanke built a commercial building near Hong Kong Road on Jiefang Avenue, and half of the construction was already completed, when the market turned around and the project was suspended. Around 2005, the company plans to re-invest in the construction of residential buildings on the same site and switch to residential development.

At this time, if you consider the cost invested in previous years (sunk cost) and the cost of re-investing now, it is likely that the loss will outweigh the loss. But considering that what has already been built is currently useless and is a cost in the past, now it is only necessary to consider whether there is money to be made compared with the current new investment and the new income. That is, the market can accept the product ** greater than the new input cost (variable cost).

Unit Profit (Unit Price, Unit Variable Cost) Unit Fixed Cost.

Unit Cost Unit variable cost + unit fixed cost.

Unit price: Unit variable cost + unit fixed cost + unit profit.

**Can be lower than unit cost, just less profit per unit.

**Less than the variable cost per unit is an actual loss.

Unit cost = variable cost + fixed cost allocated to each product.

Assuming that the fixed cost is f, the variable cost is v, the product output is q, and the total cost is c, then the cost function is c=f+v*q.

If product ** is p and revenue is s, then the revenue function is s=p*q.

With q as the horizontal axis and s and c as the vertical axis, it is clear to draw a function graph, only p>v, as long as the break-even point is exceeded, s is greater than v.

This view is not correct, the cost of the product includes fixed costs and variable costs, and the pricing of a certain product is lower than the cost of the product but higher than the variable cost, and in the absence of other orders, in order to reduce losses, the enterprise can also accept.

Direct materials refer to the direct materials, auxiliary materials, equipment accessories, purchased semi-finished products, fuels, power, packaging, low-value consumables and other direct materials and power, steam and other power actually consumed by the product cost items in the production process of the enterprise.

Direct labor refers to the wages, bonuses, allowances and subsidies of personnel directly engaged in product production, as well as employee welfare expenses of personnel directly engaged in product production.

Manufacturing expenses are various indirect costs incurred by enterprises for the production of products and the provision of labor services, such as the wages and welfare expenses of workshops, branch management personnel and technical personnel, the depreciation and repair costs of fixed assets used in the workshop of product cost items, office expenses, water and electricity costs, machine and material consumption, labor protection costs, seasonality, and downtime losses during repairs.

The manufacturing cost of the product is accounted for through the production cost sub-ledger account. The cost information recorded in the production cost ledger is recorded, and the total cost and unit cost of various finished products are calculated according to a certain cost calculation method (such as variety method, batch method, step-by-step method, classification method, etc.).

Answers]: a, b, c, d

The variable cost referred to in the variable cost pricing method refers to the complete variable cost, including the variable manufacturing cost (direct material cost, hail disadvantage direct labor cost, variable manufacturing cost) and the variable period cost.

1. Classification of fixed costs (within a certain amount of time, the total cost is not affected by the cost of the change in the business volume, and the unit fixed cost changes in inverse proportion to the business volume).

1. Binding fixed cost (also known as operating capacity cost): It is the fixed cost of the management that cannot change its specific amount (short-term business decision-making action) (that is, the cost that cannot be changed if it is tied) such as: insurance premiums, house rent, depreciation, property insurance premiums, basic salaries of management personnel, etc.

Reduction strategy: can only make reasonable use of the existing production capacity of the enterprise, improve production efficiency, in order to achieve greater economic benefits.

2. Discretionary fixed costs (also known as business policy costs): It is the fixed cost (short-term business decision-making action) that the management can change its amount, such as: advertising expenses, staff training expenses, new product research and development expenses, etc.

Reduction strategy: The only way to reduce discretionary fixed costs is to be economical, budget-conscious, and to prepare a positive and feasible cost budget and strictly implement it to prevent waste and over-investment.

2. Classification of variable costs (within a certain period of business volume, the total cost changes in proportion to the change in business volume, and the unit variable cost remains unchanged).

1. Semi-variable cost: (fixed fee at the beginning of the period, and then change in proportion to the business volume) means that there is a fixed base, which has nothing to do with the change in business volume, similar to fixed cost. On the base, it increases with the increase in business volume.

For example, if you have a fixed line, you need to pay a monthly rent regardless of whether you call it or not.

2. Semi-fixed cost: (fixed fee within the quantitative, stepwise increase after exceeding the amount) refers to the amount that remains unchanged within a certain amount, similar to the fixed cost, but after the business business grows to a certain amount, the amount will jump to another level, such as: the salesman commission is 500 yuan within 1000 pieces, and then increase by 500 to 2000, and then increase by 1000 to 5000.

The difference between semi-variable and deferred is the fixed base part, and the initial fixed base of semi-variable cost is not linked to the business volume, and the variable cost must be calculated once the business occurs. The fixed base of deferred variable costs includes a certain range of business volumes, and only the variable cost method is used for transactions that are out of scope.

3. Curve variable cost: (fixed fee at the beginning of the period, which changes with the business volume later, but in different proportions) There is usually an initial amount, and the initial amount changes with the business volume, but it is not proportional.

4. Deferred residual cost: (quantitative fixed, excess part of the year-on-year change) refers to a fixed base within a certain business volume, when the business volume growth exceeds this range, it will change in proportion to the growth of business volume. For example, if there is a fixed line, it is fixed within **, and it changes proportionally to the number of minutes after exceeding.

Semi-variable cost is a category of variable cost, which cannot be directly analyzed together with fixed cost and variable cost.

The factor that does not affect the cost reduction of comparable products is the change in product yield.

Reduction in the cost of comparable products = (actual output of comparable products in the current period x actual average unit cost of the previous year) - actual total cost of comparable products in the current period, cost reduction rate of comparable products = 1 - actual total cost of comparable products in the current period Actual output of comparable products in the current period x actual average unit cost of the previous year) 100%.

Comparable productsThe cost of products that have been in normal production in the previous year or in recent years, continue to produce in the current year or planned year, and have cost information that can be compared between the previous and later periods. The comparability of products is determined by the main specifications and performance of the products. If the technical conditions, quality and type of raw materials used for a certain product produced in the current or planned year are different from those in the past, but the main specifications and properties of the product are the same, it will still be regarded as a comparable product.

Summary. Dear, hello, in response to your question "one of the disadvantages of the variable cost method is that the calculated unit cost is not a complete cost, can not reflect the product production process" now to give you a reply to the pro One of the disadvantages of the variable cost method is that the calculated unit cost is not a complete cost, can not reflect the product production process is right, the variable cost method can not reflect all the costs incurred in the production process of the product; The variable cost method has a clear effect on short-term business decision-making, but it is not suitable for long-term decision-making.

One of the disadvantages of variable costing is that the calculated unit cost is not a full cost and does not reflect the production process of the product.

Dear, hello, in response to your question "one of the disadvantages of the variable cost method is that the calculated unit cost is not a complete cost, can not reflect the product production process" now to give you a reply to the pro One of the disadvantages of the variable cost method is that the calculated unit cost is not a complete cost, can not reflect the product production process is right, the variable cost method can not reflect all the costs incurred in the production process of the product; The variable cost method has a clear effect on short-term business decision-making, but it is not suitable for long-term decision-making.

It does not conform to the traditional concept of cost. AAA's Cost Concepts and Guidelines Committee considers that "costs have been incurred or are likely to be incurred in order to achieve a specific purpose, and are measured in monetary terms". According to this traditional view, both fixed and variable costs are charged to the cost of the product.

2.Unable to adapt to the needs of long-term decision-making. The variable cost method has a clear effect on short-term business decision-making, but it is not suitable for long-term decision-making.

3.Affect the income of the taxing department and the timely income of investors. The variable cost method generally lowers the valuation of ending inventories, lowers the amount of operating profit, and to some extent temporarily lowers income tax and dividends.

4.The cost breakdown is not precise enough. Dividing costs into fixed and variable costs is largely the result of assumptions and is not an exact calculation.

The advantages of the variable cost method distinguish between fixed costs and variable costs, which is conducive to clarifying the profitability of enterprise products and dividing cost responsibilities. Maintain the consistency between profit and sales volume, and promote production based on sales; It reveals the dependence between sales volume, cost and profit, so that the current profit truly reflects the business status of the enterprise, which is conducive to the operation and decision-making of the enterprise.

Under the variable cost method, the variable production cost of a product is only related to the current sales volume, but not to whether there is a balance of inventory at the end of the period, which also shows that the fixed manufacturing expenses in the product cost under the variable cost method are not carried forward with the flow of products.

Variable cost refers to the change of total cost with the change of business volume (output, operation volume or sales volume), such as direct labor, direct materials, etc.

The scientific management of enterprises requires accounting to provide information for the internal management of enterprises, as the basis for economic activities, decision-making, planning and control, and the traditional total cost accounting method can not adapt to the increasingly competitive market economy.

After the Second World War, higher requirements were put forward for accounting, and the variable cost method began to be born in Western enterprises, and it is now widely applied to the internal management of Western enterprises.

The variable cost method is to divide the production cost into two categories: variable cost and fixed cost according to its cost nature, that is, it is divided into variable production cost (i.e., direct material, direct labor and variable manufacturing cost) and fixed production cost (fixed manufacturing expense), and then the fixed production cost and non-production cost (period expense) are all regarded as period costs.

Under the variable cost method, the variable cost of production is only borne separately between finished goods sold, finished goods in stock and products in progress. Therefore, the valuation of inventories of products and finished goods under the variable cost method is necessarily lower than that of inventories under the full cost approach.

Under the variable cost method, the following items that are not part of the product cost are ()aDirect material.

b.Direct Tung Cracker Artificial.

c.Variable manufacturing costs.

d.Variable selling and administrative expenses.

Correct answer: Change sales and management fee for the wheel cavity of the shirt.

Summary. Dear, hello, when the undertaking of special orders does not affect the completion of normal order production, that is, the use of remaining production capacity can complete special orders, and at the same time do not need to add exclusive costs, and the remaining production capacity can not be transferred, as long as the unit price of the special order is greater than the unit variable cost of the product, the order can be accepted.

Is it true that any order below the cost of production is unacceptable when a company produces and sells a product? Why?

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Dear, hello, when the special order does not affect the completion of the normal order production, that is, the use of the remaining production capacity can complete the special order, and at the same time does not need to add exclusive costs, and the remaining production capacity can not be transferred, as long as the unit price of the special order is large and matches the unit variable cost of the product, the order can be accepted. <>