Ch04 ManAcct4eupdated

Ch04 ManAcct4eupdated - Chapter4 CostBehavior andRelevant...

Info iconThis preview shows pages 1–9. Sign up to view the full content.

View Full Document Right Arrow Icon
1 Chapter 4  Cost Behavior  and Relevant  Costs
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2 Introduction What is the nature of costs and how  are they used in decision making? Do they increase or decrease as  production volume changes? Do they remain stable?
Background image of page 2
3 Introduction The concept of predictable  cost behavior  based on volume  is very important to the  effective use of accounting information for  managerial decision making. As production volume changes, costs may Increase Decrease Remain the same
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
4 Introduction Costs behave in predictable  ways.
Background image of page 4
5 The Behavior of Fixed Costs Fixed costs remain the  same in total , but may vary per  unit when production volume changes. Examples: Rent, Depreciation, Salary of a Plant Manager,  Insurance, Property Taxes Volume $ Total Fixed Costs Volume $ Fixed Cost Per Unit 10 25 50 75 4 25 50 2 75 1.33
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
6 Behavior of Fixed Costs As production increases, total fixed  costs stays the same.  As production increases, fixed costs per  unit decreases.  As production decreases, fixed costs  per unit increases. 
Background image of page 6
7 The Behavior of Variable Costs Variable costs vary in direct proportion to changes in  production volume, but are fixed when expressed as per- unit amounts. Examples: Direct material, direct labor, and other unit- level costs like factory supplies Volume $ Total Variable  Costs Volume $ Variable Cost Per Unit 25 50 50 100 75 150 25 50 75 20
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
8 The Behavior of Variable  Costs As production increases, total variable  costs increase.
Background image of page 8
Image of page 9
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 08/30/2011 for the course ART 3514 taught by Professor Dhbannan during the Summer '03 term at Virginia Tech.

Page1 / 30

Ch04 ManAcct4eupdated - Chapter4 CostBehavior andRelevant...

This preview shows document pages 1 - 9. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online