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Cost Behavior as an Organization Grows
One reason for undertaking the sort of cost behavior discussed above is that it helps managers assess what will
happen to costs as the organization grows, and to be better able to manage growth as a result. Once we have determined that certain costs are variable, for example, we can assume that they will grow in a linear fashion as our volume grows. On the other hand, both fixed and step function costs will not grow linearly. Since revenue tends to
grow in a linear fashion, and more steeply (one hopes) than variable costs, growth should allow us to increase our
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- Spring '14