AccountingPrinciplesCost-Volume-Profit幻灯片.pptxVIP

;Learning Objectives;Cost Behavior Analysis is the study of how specific costs respond to changes in the level of business activity. Some costs change; others remain the same. Helps management plan operations and decide between alternative courses of action. Applies to all types of businesses and entities. Starting point is measuring key business activities. ;Cost Behavior Analysis is the study of how specific costs respond to changes in the level of business activity. Activity levels may be expressed in terms of: Sales dollars (in a retail company) Miles driven (in a trucking company) Room occupancy (in a hotel) Dance classes taught (by a dance studio) Many companies use more than one measurement base.;Cost Behavior Analysis is the study of how specific costs respond to changes in the level of business activity. Changes in the level or volume of activity should be correlated with changes in costs. Activity level selected is called activity or volume index. Activity index: Identifies the activity that causes changes in the behavior of costs. Allows costs to be classified as variable, fixed, or mixed.;Costs that vary in total directly and proportionately with changes in the activity level. Example: If the activity level increases 10 percent, total variable costs increase 10 percent. Example: If the activity level decreases by 25 percent, total variable costs decrease by 25 percent. Variable costs remain the same per unit at every level of activity.;Illustration: Damon Company manufactures tablet computers that contain a $10 camera. The activity index is the number of tablets;Illustration: Damon Company manufactures tablet computers that contain a $10 camera. The activity index is the number of tablets;;Variable costs are costs that:;;;Throughout the range of possible levels of activity, a straight-line relationship usually does not exist for either variable costs or fixed costs. Relationship between variable costs and changes in activity level is often curviline