ch5 - 1 Ch5 Cost Behaviour Managerial Accounting ADM 2341...

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Unformatted text preview: 1 Ch5 Cost Behaviour Managerial Accounting ADM 2341 Ch.5 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 2 Ch5 Cost Behaviour Managerial Accounting ADM 2341 Cost is the dependent variable Activity is the independent variable 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 3 Ch5 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. $$ Activity Ex: Direct material 4 Ch5 Cost Behaviour Managerial Accounting ADM 2341 Mixed Cost both a variable and a fixed component $$ Activity Ex: Utilities 5 Ch5 Cost Behaviour Managerial Accounting ADM 2341...
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This note was uploaded on 09/13/2011 for the course ADM 2341 taught by Professor Managerialaccounting during the Winter '07 term at University of Ottawa.

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ch5 - 1 Ch5 Cost Behaviour Managerial Accounting ADM 2341...

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