BUSS1030 Lecture Notes - Lecture 10: Relate, Opportunity Cost, Marginal Cost

• School: University of Sydney
• Department: Business Studies
• Course: BUSS1030
• Professor: All

Document Summary

Buss1030 lecture 10 cost behaviour & cost volume profit. Fixed cost stays fixed (the same) in total when changes occur to volume of activity, e. g. rent. Variable cost varies according to volume of activity, e. g. electricity. Both types of costs are associated with an activity important to decision-making process of understanding quantity & effect of both implement strategies (mainly for internal use by managers) Likely to change as a result of inflation/general price increases (not affected by change in volume of activity) Al(cid:373)ost al(cid:449)ays (cid:858)ti(cid:373)e-(cid:271)ased(cid:859) vary with length of time concerned (often a slight increase each year) Stay the same regardless of output level, but must increase to allow higher output level. Graph of fixed costs against volume of activity a straight horizontal line. E. g. graph for rent cost may rise due to year-on-year growth (step approach) acquire more office space.