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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
explain briefly variable cost, fixed cost and semi- variable in the production cost of a productor service, giving example for each
Describe Committed fixed costs Committed fixed costs are those fixed costs that arise from the possession of 1. Plant, building and equipment (for example, depreciation, re
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THE BREAK EVEN POINT
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when assessing Market Value of common stock, is the "market value" the market value when the company sold the stock or the current market value?
Decision Making Some managers appear to have an intuitive sense of good decision making. The reality is that good decision making is hardly ever done by intuition. Consist
Examples
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