Type of Organization
Variable Costs
Mixed Costs
Fixed Costs
Definitions
100
Costs that are normally variable with respect to volume of output for cost of goods sold.
What is merchandising company
100
Example: Santa will be delivering more gifts this year due to more children being on the nice list. With delivering more gifts, the cost of fuel will increase in direct proportion with the increase of nice children.
What is true variable cost
100
Example: Santa is doing an analysis on how much it costs to wrap a box of Lego toys. There are many costs such as; labor, electricity, wrapping paper, boxes of Lego toys, and the maintenance of the workshop.
What is account analysis
100
What is the fixed cost element in the high-low method equation?
What is total cost - variable cost element
100
The relative proportion of each type of cost in an organization is known as
What is cost structure
200
Costs that are normally variable with respect to volume of output for supplies and travel.
What is service organizations
200
What is the variable cost element in determining the high-low method equation?
What is change in cost/change in activity
200
Example: Santa is expanding his operations into a foreign territory of providing cookies to the children he delivers to. He will need to learn the costs of baking cookies, the time it will take to bake the cookies, and the amount of cookies to deliver to the children.
What is the engineering approach
200
Investments in facilities, equipment, and basic organizational structure that can't be significantly reduced even for short periods of time without making fundamental changes.
What is committed fixed cost
200
A method for analyzing cost behavior in which an account is classified as either variable or fixed based on the analyst's prior knowledge of how the cost in the account behaves.
What is account analysis
300
Costs that are normally variable with respect to volume of output for direct materials and direct labor.
What is manufacturing company
300
The cost of a resource that is obtained in large chunks and that increases or decreases only in response to fairly wide changes in activity.
What is step-variable costs
300
The equation of mixed cost is
What is a+bX
300
Example: The elves need training in order to take on management positions within the workshop.
What is discretionary fixed cost
300
A measure of whatever causes the incurrence of a variable cost.
What is activity base
400
Costs that are normally variable with respect to volume of output for variable elements of selling and administrative costs.
What is manufacturing and merchandising companies
400
Example: Santa needs to hire more elves to make the gifts for the large increase of the children on the nice list.
What is step-variable cost
400
The components of mixed costs include
What are variable costs, fixed costs, and level of activity
400
Example: Santa's workshop is depreciating at a constant rate.
What is committed fixed cost
400
The range of activity within which assumptions about variable and fixed cost behavior are reasonably valid.
What is relevant range
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