Chapter 18 from powerpoint

Chapter 18 from powerpoint - Chapter 18 Cost Behavior...

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Chapter 18 Cost Behavior Analysis is the study of how specific costs respond to changes in the level of business activity. A knowledge of cost behavior helps management plan operations and decide between alternative courses of action For an activity level to be useful: Changes in the level or volume of activity should be correlated with changes in costs Variable costs are costs that vary in total directly and proportionately with changes in the activity level Variable costs remain the same per unit at every level of activity. The relationship between variable costs and changes in activity level is often curvilinear. Examples of Variable Costs: Direct Materials. Direct Labor. Cost of Goods Sold. Sales Commissions. Freight-Out for a Merchandiser. Gasoline at a Taxi Company. Fixed costs are costs that remain the same in total regardless of changes in the activity level. Fixed costs
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Chapter 18 from powerpoint - Chapter 18 Cost Behavior...

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