Fixed-Cost-Absorption-by-Volume (1).pptx

by Alvar Maldonado

Impact of reducing currency supply on cost per pound.

Fixed Cost Absorption by Volume

Represented by total available currency in pounds.

Volume Change

Costs that don't change regardless of volume.

Fixed Costs

Understanding Fixed Costs and Volume

XX dollars

Total Fixed Costs

1,956,008

Total Pounds Available

Initial Currency Volume

436,701 / 1,956,008 x 100 ≈ 22.29%

Percentage Reduction

1,956,008 - 1,519,307 = 436,701 pounds

Reduction in Volume

1,519,307

New Amount of Pounds

Changes in Currency Volume

X / 1,519,307

New Cost per Pound

X / 1,956,008

Old Cost per Pound

Impact on Fixed Cost Absorption

(1,956,008 - 1,519,307) / 1,519,307 x 100 ≈ 28.74%

Percentage Increase

X / 1,519,307

New Cost

X / 1,956,008

Old Cost

Effect of Reduced Volume on Cost per Pound

Reducing volume leads to higher cost per pound.

Conclusion

Approximately 28.74%

Increase in Cost

Approximately 22.29%

Reduction in Volume

Summary of Findings