Bhimani, Horngren,
Datar and Rajan,
Management and Cost Accounting, 5
th
Edition, Instructor’s Manual
© Pearson Education Limited 2012 Regarding requirements 2 and 3, note that the decrease in service
can be measured by a formula % Budget change Reduction in service =
% Variable cost The variable-cost percentage is (SFr 400 × SFr 625) ÷ SFr 400,000 = 62.5%
10%
% Reduction in service =
6.25%
= 16%
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