ADM2341 Chapter 6 Cost Behaviour

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Unformatted text preview: , highly-trained and highly-trained and difficult to replace. The difficult to replace. The cost to compensate cost to compensate these valued employees these valued employees iis relatively fixed s relatively iis relatively fixed s relatively rather than variable. rather than variable. LO 1 6-21 Is Labour a Variable or a Fixed Cost? The behaviour of wage and salary costs can differ across countries, depending on labour regulations, labour contracts, and custom. In France, Germany, China, and Japan, management has little flexibility in adjusting the size of the labour force. Labour costs are more fixed in nature. In the United States and the United Kingdom, management has greater latitude. Labour costs are more variable in nature. LO 1 6-22 Rent Cost in Thousands of Dollars Fixed Costs and Relevant Range 90 Relevant 60 Range 30 0 0 Total cost doesn’t Total cost doesn’t change for a wide change for a wide range of activity, range of activity, and then jumps to and then jumps to a new higher cost a new higher cost ffor the next higher or the next higher range of activity. range of activity. 1,000 2,000 3,000 Rented Area (Square Feet) LO 1 6-23 Fixed Costs and Relevant Range...
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