That is why the breakeven point has fallen from 1500

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Unformatted text preview: •••••••••• Relation of Cost Behavior to Full Cost Accounting The analysis of differential costs would be simplified if, as occasionally is assumed, all service center costs were fixed and all production center costs were variable. Unfortunately, this is almost never the case. Exhibit 2-2 contains an illustration of four different cost types and their fixed versus variable and production center versus service center distinctions. The example refers to the costs of Lawncare, Inc., which was discussed in Chapter 1. _________________________________________________________________________________________________________ Exhibit 2-2. FIXED AND VARIABLE COSTS VERSUS PRODUCTION AND SERVICE CENTER COSTS Fixed Production Center Costs Service Center Costs Supervisor's salary in the Mowing prod uction center Portion of chief executive officer's salary (which is a cost of ad ministration that is allocated to the Mowing prod uction center) Variable Gasoline costs for operating the lawn mowers in the Mowing prod uction center Lubricant co...
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