BU247 Lecture Notes - Lecture 1: Fixed Cost, Management Accounting, Opportunity Cost
Document Summary
Often prospective rather than retrospective preparing for the future. Must be decision relevant different costs for different purposes. Variable costs: costs that are dependent upon units" amount, distance, etc. Ie unit cost is 5$ and 1000 units therefore variable costs is 5000 dollars. In general, they are dependent upon some unit of production. Fixed costs: costs that do not change according to changes in the variables. Mixed costs: both with variable and fixed component, such as a commission starts after certain amount of sales and before that it is fixed. Or data plans that have a set fee and then variable fee after certain amount, ***wages are fixed for a certain amount and then increase and then fixed again**** step variable costs. Incremental costs: cost that increase as the result of a decision. Ie going to the movies: buying popcorn (variable), 3d price (fixed), transportation (variable/fixed depending) Avoidable costs: costs that decrease as a result of making a decision.
