COMM 291 Chapter 6: COMM294 - Chapter 6 - Cost Behaviour
16
COMM 291 Full Course Notes
Verified Note
16 documents
Document Summary
Cost behaviour - the description of how costs change as volume changes. Looking at how managers use cost behaviour for planning and decision making. Variable costs: change in total in direct proportion to changes in volume. Fixed costs: costs that do not change in total despite wide changes in volume. Committed fixed costs: locked in cost due to previous management decisions (ex. property tax once building is built) Discretionary fixed costs: result of annual management decisions, management have more control over discretionary xed costs as they can be adjusted (ex. Mixed costs: change in total but not in direct proportion to changes in volume. Some utility costs will rise when you have greater demand for hotel rooms but there will be some costs used regardless of how many guests are staying. Total vc = variable cost x volume of activity. Total fc = fixed amount over a period of time.
