ARBUS102 Lecture Notes - Lecture 14: Fixed Cost, Variable Cost, European Cooperation In Science And Technology
20 Mar 2017
School
Department
Course
Professor
Document Summary
Week 7 lecture 2: cost concepts: classifying costs. How costs react to changes in the level of activity: total variable costs change when activity changes total fixed costs remain unchanged when activity changes. Total variable cost changes as activity level changes. Variable cost per unit remains the same over wide ranges of activity. Total fixed cost remains the same even when the activity level changes. Fixed cost per unit goes down as activity level goes up. Relevant range: the range of activity within which the assumptions about variable and fixed costs are valid. Common cost: a cost that is incurred to support a number of cost objects but cannot be traced to them individually. For example, the salary and benefit package of the receptionist in a bank is common to all different services provided by the bank. Cost object: anything for which cost data is desired.
