ACCG106 Lecture Notes - Lecture 10: Outsourcing, Operating Leverage, Qantas

• School: Macquarie University
• Department: ACCG - Accounting and Financial Management
• Course: ACCG106
• Professor: All

Document Summary

Cvp analysis concerned with the change in profit in response to changes in sales volume, costs and price. Examining cost behaviour enables us to consider: the way in which costs change, the main factors that influence those changes. Costs can be classified as fixed, variable or mixed: the nature of fixed or variable costs relates to whether such costs are likely to alter in total with changes in activity. Fixed costs costs which remain the same in total irrespective of the level of activity of timeframe (e. g. lease costs, rental) When we consider the levels of activity in terms of units of output: total fixed costs remains the same, fixed costs per unit will decrease as the number of units produced increases. Relevant range range of the activity over which the cost behaviour is assumed to be unchanged. If the activity level goes outside the relevant range, then the expected behaviour of the cost may change.