BU247 Chapter 3: BU247 Chapter 3
Document Summary
Bu247 | chapter 3: using costs in decision making. Variable and fixed costs: variable costs, variable cost the cost of flexible resources. Increases proportionally with changes in the activity level of some variable: i. e. the activity of making a chair in a furniture factory consumes the wood that goes into the chairs. The cost of wood is estimated to be . The variable cost equation for wood would be: Variable cost for each rocking chair = variable cost of. Wood + variable cost of labor + variable cost of supplies. This escalates the total cost of making a selling the chair to. These costs do not depend on how much of the. Examples of fixed administrative costs include salaries paid to head office staff and depreciation on the head office building. Total cost = variable cost + fixed cost. = ( x # of chairs made) + ,000.
