Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 8

Verbatim Company’s budget for last year included $80,000 for variable costs. The total actual variable costs for the period were $72,000. Can we say that the plant manager has done a good job in controlling these costs if actual production was 80 percent of budgeted production?

Step 1 of 2

Fixed costs are costs which does not changes with change in level of production. Variable costs are costs which does changes with change in level of production.