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How costs behave as the level of activity/volume changes. Why an understanding of cost behaviour is important ?
Types
Variable e.g. petrol, direct materials
Fixed e.g. car tax, factory rental
Semi-variable (Hybrid) e.g. phone bill. Cost separation is the process of separating the fixed and variable elements of a semi variable cost.
Methods
High – Low Method
Regression Analysis
Cost Separation
Why an understanding of cost behaviour is important ?
Unit Costing
Pricing
Decision Making
Budgeting
Break-even analysis
Is there a theory for financial ratios
#Explore the behavioral aspects of budgeting#
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their definitions and the advantages and disadvantages
#quesXERCISE 3-15 Departmental Overhead Rates [LO1, LO2, LO3] Diewold Company has two departments, Milling and Assembly. The company uses a job-order costing system and computes a
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How much was Topaz’s operating income (income before taxes) last year?
This variable deals along with the granting of credit. On one great all the customers are granted credit and conversely, none of them are granted credit irrespective of their credi
Ordering Costs These are incurred in getting purchased items into the company’s inventory or stores, and usually consist of clerical costs of: • Making the purchase demand.
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