We then solve for the unknown which in this case is

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Unformatted text preview: _________________________________________________________________________________________ Exhibit 2-1. TYPES OF COST BEHAVIOR A B $ $ Step-Function Costs Fixed Costs 0 Volume 0 C Volume D $ $ Semi-V ariable Costs V ariable Costs 0 0 Volume Volume _________________________________________________________________________________________________________ ____________________________________________________________________________________________________________ David W. Young • Management Accounting for Managers • Chapter 2 Page 25 Copyrighted Material. Do not reproduce without written permission. Fixed Costs Fixed costs are independent of the number of units produced. While no cost is fixed if the time period is long enough, the relevant range for fixed costs (i.e., the span of units over which they remain unchanged), or the time period within which they are considered) generally is quite large. They can be viewed graphically as shown in Quadrant A of Exhibit 2-1. A good example of a fixed cost in most organizations is rent. Regardle...
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