...Managerial Accounting Group Presentation Chapter 5 Cost Behavior : Analysis and Use Group Member: Jayanti Suli F12218004 Juan Hanam F12218005 Ricwilson Horax F12218006 Richard Hendrawan F12418022 Types of Cost Behavior Patterns Cost Structure is the relative proportion of fixed, variable and mixed costs found within an organization 1. Variable Costs An activity base (also called a cost driver) is a measure of what causes the incurrence of variable costs. As the level of the activity base increases, the total variable cost increases proportionally. Units produced (or sold) are not the only activity base within companies. A cost can be considered variable if it varies with activity bases such as miles driven, machine hours, or labor hours. True variable costs As an example of an activity base, consider your total long distance telephone bill. The activity base is the number of minutes that you talk. A true variable cost is one whose total dollar amount varies in direct proportion to changes in the level of activity. On your land-line, your total long distance telephone bill is determined by the number of minutes you talk. An activity base, or cost driver, is a measure of what causes the incurrence of variable costs. As the level of activity base increases, the variable cost increases proportionally. Variable Cost per Unit A variable cost remains constant if expressed on a per unit basis. The cost per minute talked is constant. For example, 10 cents per minute...
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