ACC 410 Chapter Notes - Chapter 2: Statistical Significance, Financial Statement, Scatter Plot
Document Summary
Controllable vs. uncontrollable cost: relevant costs: costs that differentiate between two alternatives (e. g. , opportunity cost) Irrelevant costs: will not make a difference to either alternative and has no bearing on decision making (e. g. , sunk cost) When costs are linear and the level of activity is within the relevant range, marginal cost is the same as variable cost per unit. Total variable costs: change proportionally with changes in activity levels. Total fixed costs: do not vary with small changes in activity levels (e. g. rent: mixed costs: costs that are partly fixed and partly variable. Total costs: total variable costs plus total fixed costs: a cost function is an algebraic representation of the total cost of a cost object over a relevant range of activity. V = variable cost per unit of activity. Some costs are fixed at one level for one range of activity and fixed at another level for another range of activity.
