ACCT 2230 Chapter : Managerial Accounting Chapter Six Notes

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burgundychinchilla338

14 Jan 2012

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Chapter 6- cost behaviour: analysis and use y cost behaviour refers to how a cost will react or change as changes take place in the level of business activity. y we have only mentioned variable and fixed costs. a variable cost is a cost whose total dollar amount varies in direct proportion to changes in the activity level. Direct proportion signifies that if the activity level doubles, the total dollar amount of the variable costs also doubles. a variable cost remains constant if expressed on a per unit basis. the idea that a variable cost is constant per unit but varies in total with the activity level is crucial to an understanding of cost behaviour patterns. the activity base y activity base is a measure of whatever causes the incurrence of a variable cost. For example, the total cost of x-ray film in a hospital will increase as the number of x-rays taken increases.

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Cost Behavior and Operating Income

posted Nov 28, 2016, 4:07 AM

Variable costs are directly proportionate to the level ofproduction activity for the period. So if your units produceincrease, then your variable costs will increase. Fixed costsremain constant over a wide range of production activity so nomatter what your amount of production, your fixed cost remains thesame. Semi-variable costs have a fixed element and a variableelement. Your utility bill would be a good example of that cost.How do you first, figure out how to separate fixed vs variablecosts in semi-variable costs to allocate to jobs? AND I'm going tostretch you...what are stepped fixed costs?

emeraldeel675

Match the items in the two columns below by entering theappropriate code letter in the space provided.

The amount of revenue remaining after deducting variablecosts.
Costs that contain both a variable and a fixed element.
The percentage of sales dollars available to cover fixed costsand produce income.
Identifies the activity which causes changes in the behavior ofcosts.
The difference between actual or expected sales and sales atthe break-even point.
Costs that vary in total directly and proportionately withchanges in the activity level.
The level of activity at which total revenues equal totalcosts.
The range over which the company expects to operate during theyear.
Costs that remain the same in total regardless of changes inthe activity level.
A costing approach in which all manufacturing costs are chargedto the product.
A method that uses the total costs incurred at the high and lowlevels of activity.
A costing approach in which only variable manufacturing costsare product costs and fixed manufacturing costs are period costs(expenses).

1.	Activity index
2.	Variable costs
3.	Fixed costs
4.	High-low method
5.	Relevant range
6.	Mixed costs
7.	Break-even point
8.	Contribution margin
9.	Variable costing
10.	Absorption costing

orangetermite875

Which of the following statements describes variable costs?

Costs that vary on a per unit basis as the level of activitychanges

Costs that vary in total in direct proportion to changes in thelevel of activity

Costs that remain the same in total dollar amount as the levelof activity changes

Costs that vary on a per unit basis but remain the same in totalas the level of activity changes

A variant of fiscal-year budgeting whereby a twelve-monthprojection into the future is maintained at all times iscalled:

A. Flexible budgeting

B. Continuous budgeting

C. Zero-based budgeting

D. Master budgeting

erinelk174

ACCT 2230 Chapter : Managerial Accounting Chapter Six Notes

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