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Ch 6 ADM2341A Cost Behaviour

Ch 6 ADM2341A Cost Behaviour - Ch.6 Cost Behaviour Patterns...

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1 Ch6 Cost Behaviour Managerial Accounting ADM 2341 Ch.6 Cost Behaviour Patterns Three cost behavior patterns - variable costs, fixed costs, and mixed costs - are found in most organizations. The relative proportion of each type of cost is known as a firm's cost structure
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2 Ch6 Cost Behaviour Managerial Accounting ADM 2341 Activity is the independent variable since it is not a cost but rather controls or influences the amount of cost that will be incurred during the period. Ex; labour hours, batches of product, engineering orders * Cost is the dependent variable * Activity is the independent variable
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3 Ch6 Cost Behaviour Managerial Accounting ADM 2341 Variable strictly variable: varies with some activity base (such as units, direct labour hours, or machine hours) constant on a per-unit basis. $$ Activity Ex: Direct material
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4 Ch6 Cost Behaviour Managerial Accounting ADM 2341 Mixed Cost both a variable and a fixed component $$ Activity Ex: Utilities: Telephone, electricity
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5 Ch6 Cost Behaviour
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