Which company generated higher cash flow from each dollar of sales in the current year: Integrated Devices with 21.4%
What is a fixed cost?
- Fixed costs, sometimes referred to as indirect costs or overhead costs in accounting and economics, are costs incurred by a corporation that are independent of the volume of goods or services the company produces. They frequently occur again and again, like monthly rent or interest payments. These expenses are often capital expenses as well.
- Costs that are fixed are those that don't change based on volume. Most fixed costs are expenses that depend more on time than on how much your company produces or sells. Rent and leasing charges, salary, energy prices, insurance, and loan repayments are a few examples of fixed costs.
- Rent and mortgage payments are two examples of fixed expenses. Auto loans. Additional loan payments
- Total production costs — (Variable cost per unit multiplied by the number of units produced) = Fixed costs.
Cash return on assets = Operating cash flows /Average total assets
Integrated devices
= 150,000/[(800,000+600,000)/2] = 21.4%
Allied corporation
= 120,000/[(750,000+500,000)/2] = 19.2%
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