🏷️ LIMITED TIME OFFER: GET 20% OFF GRADE+ YEARLY SUBSCRIPTION →
Log in
HomeTextbook Notes300,000CA170,000

ACC 406 Chapter 3: Chapter 3 - Cost Behaviour

52 views4 pages
amethystgoat54
9 Mar 2012
School
Ryerson University
Department
Accounting
Course
ACC 406
Professor
Vincent Cappelli

For unlimited access to Textbook Notes, a Class+ subscription is required.

Document Summary

Cost behaviour is the way costs change as the related activity changes. It represents the foundation on which managerial accounting is built, much like the critical role played by the theoretical pyramid in financial accounting. Knowing how cost change as output changes is essential to planning, controlling and decision making. Cost driver is a causal measurement that causes cost to change. Identifying and managing cost drivers help managers better predict and control costs. Relevant range is a range of output over which the assumed cost relationship is valid for the normal operations of a firm. Limits the cost relationship to the range of operations that the firm normally expects to occur. Ex: looking back at the company"s pervious example if the company were to increase its current production 2 or 3 times, perhaps by adding a second or third shift, one supervisor could not possibly handle all 3 shifts.

Get access

Grade+20% off
$8 USD/m$10 USD/m
Billed $96 USD annually
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers
Class+
$8 USD/m
Billed $96 USD annually
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
30 Verified Answers

Related Documents

ACC 406 Lecture Notes - Lecture 4: Cost Driver, Denim, Fixed Cost
apricotraccoon744
ACC 406 Lecture Notes - Lecture 2: Denim, The Intercept, Variable Cost
rubyhound283
ACC 406 Lecture Notes - Lecture 3: Squared Deviations From The Mean, Cost Driver, Fixed Cost
danotehustla

Related Questions

This question has five parts:

1. Production material costs are generally fixedcosts:
a. true b. false

2. The primary functions of manufacturing accounting isplanning, controlling, and budgeting:
a. true b. false

3. Which of the following is an example cost that is variablewith respect to the number of units produced:
a. rent on the administrative office building
b. rent on the factory building
c. direct labor cost
d. salaries of top marketing executives

4. Financial accounting stresses accounting concepts andprocedures that are relevant to preparing reports for internalusers of accounting information:
a. true b. false

5. The goal of managerial accounting is to provide informationfor planning, controlling, and reporting information toshareholders:
a. true b. false

Why is it important to identify the most appropriate costdrivers for a particular product?

A) so managers can identify the activities necessary tomanufacture a product

B) so managers can control product costs better

C) so managers can predict product costs better and make betterdecisions

D) B and C

Answer:

Cost drivers are ________.

A) the different functions in the value chain

B) different types of functional areas in the firm

C) measures of activities that require the use of resources andthereby cause costs

D) different types of cost calculations

Answer:

Within the relevant range, the total amount of ________ costchanges in direct proportion to changes in the cost driver. Withinthe relevant range, the total amount of ________ cost does notchange in direct proportion to changes in the cost driver.

A) fixed; variable

B) variable; fixed

C) step; mixed

D) mixed; step

Answer:

What happens when the cost-driver level increases within therelevant range?

A) Total fixed costs remain unchanged.

B) Fixed costs per unit of cost driver increase.

C) Total variable costs decrease.

D) Variable costs per unit of cost driver increase.

Answer:

Which of the following costs is a fixed cost?

A) cost of dairy ingredients used to produce ice cream

B) depreciation expense on factory building

C) fuel used by delivery trucks

D) labor wages of workers who mix dairy ingredients to make icecream

You will explore the profession of accounting, from theperspective of managerial accounting work and careers. Below issome information that can get you started, though you will need todo some additional research on your own. You can use the library,the Internet or interview a managerial accountant to accessadditional information. Create a written document in the properform that includes the following: What is managerial accounting?What is the difference between managerial and financial accounting?Who are the users of financial accounting and managerial accountinginformation? How is managerial accounting information used to makedecisions? Identify some different jobs someone with a managerialaccounting education/experience can engage in. What is the IMAStatement of Ethical Practice and how does it impact the behaviorof an accounting professional? Describe the CMA certification forManagerial Accounting Professionals.