ACC 406 Lecture 2: Lecture 2 — Chapter 3
Document Summary
Cost driver a causal measurement that causes costs to change. While there may be more than one cost driver that is indicative of changes in the costs, yet you still have to choose the one that will correlate the most with the change in costs. A cost is xed or variable with respect to some output measure or cost driver. The relevant range range of output over which an assumed cost relationship is valid for the normal operations of a rm. Where xed costs are expected to stay relatively the same. Discretionary fixed costs : can be changed relatively easily at management discretion. Committed fixed costs : cannot be changed easily changed these involve a long-term contract. Vary in direct proportion to change in output within the relevant range. Step costs displays a constant cost for a range of output then jumps to a new cost level for a di erent range.