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The chapter discusses how full cost information can

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Unformatted text preview: ions that are made in answering this question, as well as the managerial utility of full cost information. It also links the cost accounting effort to the economist’s three factors of production: land, labor, and capital. Chapter 2. Cost Behavior The notion that different costs are used for different purposes is a basic underpinning of management accounting. This chapter explains why such a notion is important, focusing in particular on cost behavior, including the distinction among fixed, variable, step-function, and semi-variable costs. It takes up the subject of cost-volumeprofit (CVP) analysis, looking at CVP analysis (sometimes called breakeven analysis) in its most basic form, and then examining a variety of special considerations that can serve to complicate it. Chapter 3. Differential Cost Accounting Chapter 2 identifies a number of instances where full costs are inappropriate for decision-making, and where a manager needs to analyze cost behavior. This chapter takes that idea one step further, showing how full costs are ina...
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