The websites of selected companies appear below: • Biolea (http://biolea.gr/prod
ID: 2489807 • Letter: T
Question
The websites of selected companies appear below: • Biolea (http://biolea.gr/production-on-video.php Opens in a new window.) Watch the Video. Plain text: http://biolea.gr/production-on-video.php • Evian at (http://www.evian.com Opens in a new window.): Watch the videos in the Discover the Source section. Plain text: http://www.evian.com • Rockport Marine (http://rockportmarine.com/video/ Opens in a new window.): Watch the videos in About and the Video section. Plain text: http://rockportmarine.com/video/ • Jelly Belly (http://manufacturing.stanford.edu/ Opens in a new window.) Click on "How Everyday Things Are Made." Click on Jelly Beans. Plain text: http://manufacturing.stanford.edu/ Review the information about the operations of each company that is provided on the company’s website. Choose two companies and identify two specific examples from each of the following categories: o Fixed costs o Variable costs o Mixed costs.
Explanation / Answer
The two selected companies are:
(i) Evian: It is a company that makes bottled water. From the company's website and the available videos, i have identified the following costs for Evian -
a. Fixed costs - two specific examples of fixed costs at Evian are costs of water storage tanks and costs of bottling equipments. Both the costs are constant, irrespective of the volume of output.
b. Variable costs - two specific examples of variable costs at Evian are costs of shipping the bottled water and the cost of labels. These two costs are directly related to the production and higher the production, higher these costs will be.
c. Mixed costs - they are semi variable costs. Two specific examples of mixed costs at Evian are salary of salesperson which includes a fixed base pay and a variable commission and bonus pay, and the cost of factory utilities that charge a fixed amount and a variable amount depending on the usage.
(ii) Biolea: It is a company that makes olive oil. From the company's website and the available videos, i have identified the following costs for Biolea -
a. Fixed costs - two specific examples of fixed costs at Biolea are the costs of the factory buildig and costs of storage facilities for the olive oil. Both the costs are constant, irrespective of the volume of output.
b. Variable costs - two specific examples of variable costs at Biolea are cost of olives (olive is the direct material for Biolea) and cost of shipping the end product. These two costs are directly related to the production and higher the production, higher these costs will be.
c. Mixed costs - they are semi variable costs. Two specific examples of mixed costs at Biolea are salary of salesperson which includes a fixed base pay and a variable commission and bonus pay, and the cost of factory utilities that charge a fixed amount and a variable amount depending on the usage.
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