Question

please show work/give explaination

13. X Company's cost of goods sold (COGS) includes direct materials, direct labor, depreciation on production equipment, and factory rent. The company's selling, general, and administrative (SG&A) costs include sales office rent, sales staff salaries, and sales commissions. When sales volume increases by 15% in the short term, which of the following is true for the company's costs: total COGS total SG&A costs A increase by 15% no change B n o change increase by 15% e no change no change TD. increase by 15% increase by 15% E not enough information not enough information 14. Fixed costs are unknown. Variable costs are $20 per unit. At current selling price of $50, sales volume is 600 units. If you reduce the price to $46. sales volume will increase to 660 units. How much will the profit change in the short term if you reduce the price to $467 A. decrease by $3,240 B. decrease by $840 C. no change D. increase by $360 E. increase by $1,800 TC=FCTVcano ATC=20x6600 13200 FC const 15. Price is $10 per unit. At current sales volume, cost of goods sold (COGS) is 57 per unit and selling, general, and administrative (SG&A) costs are $5 per unit. Variable costs are $4 per unit. Total fixed costs are unknown. How much will the profit change in the short term if we sell 10 more units? Assume that the new volume is in the relevant range. A. decrease by $20 B. increase by $30 TC=FCAUC Increase by $40 7e4xo D. increase by $50 E. increase by $60 10x

Answer 1

13)

The correct answer is D) Increase by 15% & Increase by 15%.

Supporting explanations:

There are two types costs involved, one is variable costs which always varies due to change in the sales volume and second is fixed costs which do not change due to change in the sales volume.

Therefore, when there is a change of 15% in sales volume, the variable costs only will ctelyhange.

In the given problem, Cost of Goods Sold (COGS) has both variable costs and fixed costs. For example, Direct materials, direct labor etc. are variable costs so they also change by 15% when there is a change in the sales volume by 15%. Hence, COGS will increase by 15% due to increase in sales volume by 15%.

The Selling, general and administrative (SG&A) expenses also has one variable cost that is called Sales Commissions which is calculated by a fixed percentage on the total sales so when sales increases by 15, the sales commission is also increases by 15%, hence, the total SG&A expenses will increase by 15%.

Therefore, the correct option is D) COGS and SG&A both will increase by 15% due to variable costs.

Note: As per HOMEWORKLIB RULES, the first multiple choice question should be answered, hence, i have answered the first questions, thus, please post the remaining two questions separately as they need detailed explanations which takes more time.

Please do not give the negative rating for not answering all the questions as i just followed HOMEWORKLIB RULES.