BU247 Chapter Notes -Sunk Costs, Fixed Cost, Opportunity Cost
Document Summary
To ensure efforts are put towards a product that has a good profit potential: budgeting, a tool used for project to forecast costs for various levels of production and sales activity, budget are important in planning, which sets the organization"s direction for the budget period, performance evaluation, managers compare the actual results from the budget period with expectations that were reflected in the budget to assess how well the organization did in light of its expectations, contracting, cost reimbursement contracts organizations are reimbursed their cost plus. Variable and fixed costs an increment for the goods or service they provide under the contract: variable cost: is one that increases proportionally with changes in the activity level of some variable, cost driven: due to the many types of variables a common term used for a variable that causes a cost, variable cost = total variable cost per unit of the cost driver x cost driver units.
