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It is necessary when making decisions to classify costs by behaviour as you need to know how costs and revenues vary with different levels of activity/volume.
- Variable costs change with the level of activity. For example, doubling volume would double the variable costs. An example of a variable cost would be direct labour, direct materials within manufacturing.
- Fixed costs remain the same over a wide range of activity for a specified time period. An example of a fixed cost is rent, supervisors' salary, insurance, etc.
- Step-Fixed costs are costs which are fixed within specific activity levels. For example, if a supervisor can only supervise 100 people when there are more than a 100, then another supervisor needs to be hired. This can be a step increase or decrease depending on the change in activity levels.
- Semi-Variable costs (Mixed costs) have a variable and a fixed component. For example, telephone line may have a fixed line rental with a variable metered call.
Therefore, knowing the differences between the costs can allow you to calculate future costs and revenues relevant to different decisions.
What else can I help you with?
How do you classify cost based on Nature?
How do you classify cost based on Nature
Why is it necessary to classify the living world?
because
What do biologists classify organisms by?
They are classified by behavior, reproduction, metabolism and appearance.
Behavior traits of teenagers and classify them into negative or positive?
nothing at all
Do Economist generally do not classify those goods or service that are necessary for survival as needs?
No. If they are necessary for survival, then they are needs.
Economists generally do not classify those goods or services that are necessary for survival as needs.?
No. If they are necessary for survival, then they are needs.
How do you call a biologists who classify organisms?
A biologist who classify organisms are called taxonomist. They are specialized in classifying organisms into groups based on behavior, structure, and origin.
Why is necessary to classify a substance?
Well, substances are generally in Chemistry. It is necessary to classify a substance due to the initial fact that the chemical name could have two meanings; one may have a capital letter and the other may not
How much does the mindless behavior headphones cost?
how much does mindless behavior headphones cost
Why is kiwi like a mammal?
A kiwi is not like a mammal. It has all the characteristics necessary to classify it as a bird alone.
Why are dichotomous keys necessary?
A Dichotomous is a method for identifying a plant or animal.also plant animals fugi and mousk
What is the distinction between relevant cost and irrelevant cost?
Relevant cost is that cost which is necessary for the underlying decision in decision making process while irrelevant cost is not necessary to be decision to be made.
