Answer the Following Questions

question 151

Essay

Answer the following questions:
a.What is a cost equation?
b.If a company has fixed costs of $1,000 and variable costs of $2 per unit,what is their cost equation?
c.What would a company use a cost equation for?

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Definitions:

Net Working Capital

An evaluation of an entity's liquidity level, which is obtained by the subtraction of current liabilities from current assets.

Earnings Per Share

A company's profit divided by the outstanding shares of its common stock, indicating the company's profitability.

Depreciation Expense

An accounting method that allocates the cost of a tangible asset over its useful life.

Fixed Assets

Long-term tangible assets used in the operations of a business, not expected to be converted to cash within a year.