Cost-volume relationship, Civil Engineering

Assignment Help:

Cost-volume relationship:

Cost-volume relationship is illustrated through a simple example dealing with the cost of operating an automobile. To perform the analysis following cost regarding owning and operating an automobile is supposed.

2307_Cost-volume relationship.png

388_Cost-volume relationship1.png

Figure: Cost Volume Relationship

The cost-volume-relationship may be expressed graphically. The relation among volume (miles per year) and different type of costs (that means. fixed, variable and semi variable) is illustrated in Figure

The estimated automobile cost per annum for any assumed mileage may be determined from the graph of total cost. For instance, to drive 10,000 km in a given year a total cost of Rs. 41800 or Rs. 4.18 per km is estimated. By combining all of the fixed and variable elements of the cost, the cost of owning an automobile can be estimated as Rs.11800 per year plus Rs. 3 per km driven during the year.

The effect of volume on unit (per km) costs may be calculated through the conversion of net costs into average costs as described below:

Cost per Mile of Owning and Using an Automobile

 

Miles driven                                    5,000          10,000         15,000            20,000

Costs:                                      

Completely variable (Rs. 2Per km)   10,000                   20,000        30,000           40,000

Semi variable:                                    

Variable part (Rs.1 per km)             5,000         10,000         15,000         20,000

Fixed part                                      10,000    10,000          10,000            10,000

Fixed Costs (1500 + 300)                1,800          1,800                1,800         1,800

Total Costs                                    25,800           41,800       56,800    71,800

Cost per km                                  5.16            4.18                3.78         3.59

From the aforementioned analysis it may be seen that the variable portion of the costs raise with the increase in volume but the rate of change in variable cost remains constant. On the other hand fixed costs remains constant with changes in distances traversed but reduce on a per km basis as number of kilometers increase.


Related Discussions:- Cost-volume relationship

Dry process of cement, i want a complete flow chart of dry process of cemen...

i want a complete flow chart of dry process of cement

Calculate the net annual profit - construction management, A heavy equipmen...

A heavy equipment rental company uses a high interest rate of 30% for the rental of a specialty heavy haul dump truck.  The net annual profit for this investment is most nearly:

What is atterberg limits tests, What is Atterberg Limits tests? The At...

What is Atterberg Limits tests? The Atterberg Limits tests are designed to determine the plasticity of finer grained soils. These tests are performed on the fraction less than

Basic considerations governing selection of road alignment, Basic Considera...

Basic Considerations Governing Selection of Road Alignment: The following considerations shall be kept in view in selecting the road alignment: Roads in Plain Areas (a)

Resultant pull, two locomotive moving on opposite bank of a canal can pull ...

two locomotive moving on opposite bank of a canal can pull a vessal parallel to the banks by the means of two rope.the force in the ropes are 20kN and 24kN while the total angle be

Assignment, industrial applications of ultrasonic welding,soldering,drillin...

industrial applications of ultrasonic welding,soldering,drilling,claning

Meaning of driving succession of driven piles, Question What is meaning...

Question What is meaning of driving succession of driven piles? Answer In Basement construction, if piles are driven from centre to perimeter, there is a propensity o

Structures, What is the economic span of a bridge

What is the economic span of a bridge

Protection of lorry on the line, i. On single line by one or two men as req...

i. On single line by one or two men as required following and proceeding the lorry at a distance of 600 m. on the BG and 400 m. on the MG & NG carrying a banner flag across the tra

Surveying, define surveying and where it is involved

define surveying and where it is involved

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd