Class Notes 127 - some point where it remains for a similar...

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Class Notes 1/27 Variable costs- increases in total with an increase in output and decreases in total with a decrease in output. To determine the type of a cost, first determine the cost driver. Relevant range- range of output over which assured cost relationship is valid for the operations of a firm -avoids high and low levels of activity. Discretionary fixed costs- fixed costs than can be changed easily. Mixed costs- have both a fixed and variable component. Total variable costs= variable rate X output Total costs= fixed costs plus variable costs Step costs- display a constant level of a cost for range of output and then jumps to a higher level of cost at
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Unformatted text preview: some point where it remains for a similar level of output. Accounting records- only contain total costs. Separating costs- high low method, scatter plot, method of least squares. Dependent variable- a variable whose value depends on the value of another variable. Independent variable- variable that measures output and explains changes in cost. High low method- method of separating mixed costs into fixed and variable components by using just low and high data points. Variable rate= high point cost- low point cost/ high output- low output...
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