Textbook Notes (368,418)
Canada (161,876)
Accounting (533)
ACC 406 (130)
Chapter 3

Chapter 3

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Department
Accounting
Course
ACC 406
Professor
Vincent Cappelli
Semester
Winter

Description
ACC 406 Chapter 3Cost BehaviourBASICS OF COST BEHAVIOURCost Behaviour general term to describe whether a cost changes when the level of output changesFixed Cost A cost that does not change in total as output changesVariable Cost Increases in total with an increase in output and decreases with a decrease in outputMeasures of Output and the Relevant RangesDriver A causal factor that measures the output of the activity that leads or causes costs to changeDetermine underlying business activity and figure out how it causes cost to change exof Jeans producedRelevant Range Is the range of output over which the assumed cost relationship is valid for the normal operations of the firmFixed CostsAre costs that in total are constant within the relevant range as the level of output increasesdecreasesDiscretionary Fixed Costs Are fixed costs that can be changed or avoided relatively easily at management decisionCost that do not depend on the driver ex Advertisment costsCommited Fixed costs Fixed costs that cannot be easily changed leasing of machinery purchase of property plant and equipmentVariable CostsCosts that in total vary in direct proportion to changes in output within the relevent rangeUnit costs of direct materials is constantCan also be represented by linear e
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