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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
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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- Spring '14