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Unformatted text preview: accounting 20:04 Cost terminology Cost = volume-profit analysis Break even points Sensitivity analysis—“what if”] Budgeting Variable cost A cost that changes in total as volume changes Ex/ sales commissions, raw materials (product ingredients) A cost that stores same on a per unit basis as volume changes Fixed cost Cost that remains the same in total dollars as volume changes (changes on per unit as volume changes) Ex/ rent (even though volume increases) depreciation, insurance, advertising Mixed cost (part variable, part fixed) Cellular phones Fixed component= flat or minimum charges Variable component= cost/minutes Utilities (semi-variable cost) “cost behavior” predict future breakeven analysis control product cost (inventory cost; asset cost) any cost associated with production process raw materials factory rent assembly line wages period cost expensed in period procedure...
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- Fall '08