ACCT 102- Midterm Exam Guide - Comprehensive Notes for the exam ( 28 pages long!)
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It"s good to understand costs by behavior for: break-even and cost-volume-profit analysis, making short-term special decisions (make-or-buy decision or accept/reject special orders, appraising managerial performance by means of the contribution approach, flexible budgeting. 3. 2 a further look at costs by behavior. Relevant range the range over which volume is expected to fluctuate during the period of time being considered. Variable costs costs that vary in total with change in volume or level of activity. Examples: direct labor, direct materials, sales commissions, gasoline expenses, variable factory overhead: Fixed costs costs that do not change in total regardless of the volume or level of activity. Examples: rent, property taxes, insurance, license fees and annual insurance premiums, fixed factory overhead: Semi-variable costs costs that contain both a fixed element and a variable element. Examples: salesperson"s compensation (salary and commission, semi-variable factory overhead: Utilities: factory overhead taken as a whole. 3. 3 types of fixed costs committed or discretionary.