Accounting Final
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Date Submitted: 03/04/2015 04:27 PM
[Accounting|Final|Exam]
Module 14: Cost Behavior, Activity Analysis, and Cost Estimation
Renaissance in Cost Accounting o Governments
and
not-‐for-‐profits
o Service
industries
o In-‐sourcing
manufacturing
Cost Information in Business o Breakeven
analysis
o Outsourcing
o Pricing
o Produce
more
or
less
of
a
product
o Improvements
to
a
product
o Cost
of
health
care
(in
autos)
o Replacing
equipment
o Marketing
techniques
o Assessing
customer
profitability
Cost o A
measurement
concept
measures
a
sacrifice
of
resources
not
necessarily
an
expense
o Cost
of
going
“out
to
eat”
o Cost
of
buying
groceries
Expense o Using
up
resources
Cost Behavior o How
will
costs
change
if
a
particular
strategy
is
implemented
o Examples
o How
will
costs
change
if
add
a
second
shift?
o How
will
costs
change
if
increase
enrollment
in
a
class
by
5
students?
Variable Cost o A
cost
that
increases
(in
total)
in
direct
proportion
to
an
increase
in
volume
o Example:
the
cost
of
pepperoni
at
a
pizzeria
Fixed Cost o A
cost
that
remains
the
same
(in
total)
regardless
of
the
volume
o Example:
depreciation
of
a
pizza
oven
Relevant Range o A
level
of
activity
where
fixed
costs
remain
unchanged
where
variable
cost
per
unit
remain
unchanged
o Typically,
the
level
of
activity
that
a
company
is
currently
in
o...
