COMM 294 Lecture Notes - Lecture 9: Kilowatt Hour, The Globe And Mail, Walmart
Document Summary
Comm 294, cost behaviour: analysis & use. Types of cost behaviour patterns. Recall the summary of our cost behaviour discussion from lecture #1. The activity base (cost driver): A measure of what causes the incurrence of a variable cost. Vc is proportional to activityvc remains xedfc remain xedfc/unit declines as activity growsunits producedmhmiles drivenpohrtrue variable cost example. A variable cost is a cost whose total dollar amount varies in direct proportion to changes in the activity level. A variable cost remains constant if expressed on a per unit basis. The cost per day of use in our previous example is constant - - i. e. /day. Extent and type of variable costs. The proportion of variable costs differs across organizations. shwhen you stop using it, no more cost will occur. but the costs always cannot go down to zero. dmdlhstep- variable costs. The linearity assumption and the relevant range.
