Slide 1 ___________________________________ 2.4 Var iable Cost - PDF document

Slide 1 ___________________________________ 2.4 Var iable Cost vs. F ixe d Cost o Cost be havior ___________________________________ o How c osts be have at diffe r e nt a c tivity le ve ls ___________________________________ o As ac tivitie s rise and fall: o Some c osts will rise and fall ___________________________________ o Some c osts will stay the same o Unde r standing the se be ha viors is use ful in planning ___________________________________ ___________________________________ 2005 K D Ha the wa y-Dia l ___________________________________ Slide 2 ___________________________________ T otal Variable Costs o Costs tha t r ise and fall in dir e c t ___________________________________ pr oportion to the ac tivity o E xample of total ___________________________________ var iable c ost is $ the your total long distanc e ___________________________________ phone bill pe r month on your land line ___________________________________ ___________________________________ Units of Ac tivity E xhibit T 2M4~1 T o tal Varia ble c osts 2005 K D Ha the wa y-Dia l ___________________________________ Slide 3 ___________________________________ T otal F ixe d Costs o Costs tha t sta y ___________________________________ c onstant in total no matte r the a c tivity ___________________________________ $ o E xample is the monthly c ost of ___________________________________ ke e ping a land line phone whic h allows ___________________________________ unlimite d loc al c alls Units of Ac tivity ___________________________________ E xhibit T 2M4~2 T o tal F ixe d c osts 2005 K D Ha the wa y-Dia l ___________________________________

Slide 4 ___________________________________ Pe r Unit Variable Costs o PE R UNIT c osts ___________________________________ that stay c onstant in total no matte r the ___________________________________ $ a c tivity o E xample of pe r ___________________________________ unit c ost is long dista nt c ost pe r minute on your ___________________________________ land line phone Units of Ac tivity ___________________________________ E xhibit T 2M4~3 Pe r Unit Varia ble c osts 2005 K D Ha the wa y-Dia l ___________________________________ Slide 5 ___________________________________ Pe r Unit F ixe d Costs o PE R UNIT c osts that ___________________________________ de c r e ase as the ac tivity $ inc r e ase s o E xample of a fixe d pe r ___________________________________ unit c ost is the c ost pe r minute of loc al c alls on ___________________________________ a land line phone de c r e ase as those total loc al c a ll minute s ___________________________________ Units of Ac tivity inc r e ase ___________________________________ E xhibit T 2M4~3 Pe r Unit Varia ble c osts 2005 K D Ha the wa y-Dia l ___________________________________ Slide 6 ___________________________________ Variable and F ixe d Costs Pr oble m De te rmine whic h of the following c osts are ___________________________________ var iable or fixe d. o Prope r ty insur a nc e on the CE O’s offic e o F e lt use d in hat o Bake r ’s salary at manufac tur ing ___________________________________ Wonde r Br e ad o E le c tr ic ity use d o F ibe rglass use d in to r un the ove ns ___________________________________ the manufac tur ing at Wonde r Br e a d of a spor ts c a r o T hr e e month o CE O’s salar y adve rtising ___________________________________ c a mpaign ___________________________________ 2005 K D Ha the wa y-Dia l ___________________________________

Slide 7 ___________________________________ Variable and F ixe d Costs Pr oble m De te rmine whic h of the following c osts are variable or fixe d. o F e lt use d in hat o Prope r ty insur a nc e ___________________________________ manufac tur ing on the CE O’s offic e Va r ia ble F ixe d o E le c tr ic ity use d o Bake r ’s salary at ___________________________________ to r un the ove ns Wonde r Br e ad at Wonde r Br e a d Va r iable Va r ia ble o F ibe rglass use d in ___________________________________ o T hr e e month the manufac tur ing adve rtising of a spor ts c a r c a mpaign Va r iable ___________________________________ F ixe d or Va ria ble o CE O’s salar y F ixe d ___________________________________ 2005 K D Ha the wa y-Dia l ___________________________________