ACCT 212 Lecture Notes - Lecture 14: Balance Sheet, Finished Good, Accounts Receivable
Document Summary
How cost behave in relationship to the product were making. Cost behavior: refers to how a cost will react to changes in the level of business. Total fixed cost: do not change when activity changes. Ex: rent cost 5,000- always stays the same. Fixed cost per unit, goes down as production goes up. Fixed cost per unit, goes up as production goes down. Total variable cost: change in proportion to activity changes. Variable cost per unit always stays the same (relevant range) The variable cost in total goes up as production increases. The variable cost in total goes down as production decreases. Direct cost: any cost that can be directly traced to making a unit. Indirect: a cost we need to make the product but not traced to the single unit of product. Ex: the supervisor watching the product being made, the factory, the. Ex: the factory being used to make the product does not get expensed.
