ACC 406 Lecture 2: ACC 406 Week 2
19 Dec 2017
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Introduction to the cost function: 3 ways to estimate the total cost function. Ch 1- ethical behaviour: ex 1-5, 1-6 on your own. Based on behaviour: fixed, variable, mixed. Based on financial statement: product, period. Based on how easily they are traced to the cost object: direct. This is the output range over which an assumed cost relationship is valid, assuming normal operations. Purchase cost of raw materials: for production of 0 to 200 units, cost is /unit, for production of 201 to 500 units, cost is . 25/unit due to quantity discounts. 8(cid:1007)(cid:895), (cid:449)he(cid:396)e (cid:272)osts a(cid:396)e fi(cid:454)ed (cid:271)ut i(cid:374)(cid:272)(cid:396)ease at (cid:272)e(cid:396)tai(cid:374) increments in driver. 2nd example is site x, next slide. Site x rent expense (,000) provides sufficient space for storing/displaying up to 3000 units. We (cid:374)eed to get additio(cid:374)al spa(cid:272)e, at so(cid:373)e additio(cid:374)al (cid:272)osts. We (cid:272)ould : a) rent a 2nd showroom, b) drop lease on existing facility and rent one larger showroom.
