Chapter 2 - c Depreciation cost per unit – fixed cost(per...

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Chapter 2 Cost behavior Variable cost Fixed cost Mixed cost Operating leverage Cost Estimation Cost Behavior Can describe cost in total or per unit Fixed Cost: (Total Condo Cost) People 4 5 6 Total Cost 1200 1200 1200 Per person 300 240 200 Total cost is fixed relative to who is going. Fixed cost will decrease if expressed per unit. Variable Cost (Food Cost) People 4 5 6 Total Cost 400 500 600 Per person 100 100 100 If cost varies in direct proportion to people going it is variable; per person will be constant. Exercise 2-2A a. Total salary cost – mixed cost (because doesn’t double from 20 to 40) b. Total cost of goods sold – variable cost
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Unformatted text preview: c. Depreciation cost per unit – fixed cost (per unit price is decreasing) d. Total rent cost – fixed cost (total dollar amount is constant) e. Total cost of shopping bags – variable cost f. Cost per unit of merchandise sold – variable cost g. Rental cost per unit of merchandise sold – fixed cost h. Total phone expense – mixed cost (because it is not increasing proportional to units sold) i. Cost per unit of supplies – variable cost j. Total insurance cost – fixed cost...
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