Cost Behavior
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| Cost Behavior | show 🗑
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| Variable Costs | show 🗑
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| show | Volume increase= TVC increase
Volume decrease= TVC decrease
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| show | TVC= Variable cost per unit x volume of activity
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| Total Variable cost per unit of activity | show 🗑
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| show | Costs that do not change in total despite wide changes in volume. Include: taxes/depreciation, insurance, salaries
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| Committed Fixed Costs | show 🗑
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| show | Fixed costs that are results of management decisions; more control over these costs in the short run
ex. advertising
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| show | TFC= Fixed amount over a period of time
y = f
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| show | Volume increase = TFC decrease
Volume decrease = TFC increase
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| Mixed Costs | show 🗑
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| Does the mixed cost line begin at the origin? | show 🗑
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| Mixed Cost cost equation | show 🗑
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| relevant range | show 🗑
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| show | There is a change in relevant range
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| show | Resemble Stair Steps; fixed over a small range of activity and then jump up to a new fixed level with moderate changes in volume
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| Account Analysis | show 🗑
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| show | slope = VC/unit = rise/run
y(high)-y(low)/ x(@y1)- (x@y2)
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| show | statistical procedure for determine the best-fit equations of ALL data points (not just high and low)
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| show | Goodness-of-fit
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| show | all manufacturing-related costs are part of the cost of the product
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| Examples of Variable Manufacturing Costs | show 🗑
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| show | property takes and insurance, depreciation, lease payments
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| Variable Costing | show 🗑
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| What is the ONLY difference between absorption and variable costing? | show 🗑
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| show | income statement organized by cost behavior. Variable costing usually reported in this way
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| show | Shows managers how much profit has been made on sales before considering fixed costs
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| Contribution Margin Equation | show 🗑
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| show | ONLY when all units produced are sold in the same period
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| When is Op Inc equal for a service or merchandising company's traditional and contribution income statements? | show 🗑
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| If units produced = units sold then? | show 🗑
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| show | Absorption inc > Variable inc
Inventory increase
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| show | Absorption inc < Variable inc
Inventory decrease
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| When do inventory levels usually decrease? | show 🗑
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| show | Difference in op inc = (change in inv level, units) x (Fixed MOH PER UNIT)
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