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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
Steps of Graphic Analysis There are four steps in using graph paper to study cost-volume relationships: Step 1: Compute the scale which you will use: Volume is considered
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State Factors determining Working Capital requirement.
Anthony''s orchard
INTERPRETING THE SIMPLEX TABLEAU We can now see that our attention must be directed to reading, interpreting and analyzing the (simplex) results. It is erroneous, however, to a
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