COMMERCE 2AB3 Lecture Notes - Lecture 4: Fixed Cost

• School: McMaster University
• Department: Commerce
• Course: COMMERCE 2AB3
• Professor: Khalid Nainar

Document Summary

Cost behaviour: how will it vary: always have a reference point to compare it to. Measure key business activities to track activity and to start to measure costs: activity levels are the key business activities, examples are: Sales for retailers to act as a tracker/proxy for activity. Dance classes taught by a dance studio. You want to classify costs into three categories, variable, fixed, and mixed costs, However ultimately you want to classify even mixed costs into two categories (var. and fixed) because you need to for cvp analysis. Mixed costs are a mix of variable and fixed costs.