Cpa Bec - Cost Behavior Patterns

Front 1

What are cost behavior patterns?

Back 1

Process that allows us to predict how costs change in response to changes in production or sales.

Front 2

What is the goal in analyzing costs?

Back 2

To predict total costs and profit

Front 3

Very few costs behave consistently across a wide range of production or sales volumes. T or F

Back 3

True

Front 4

Cost behavior patterns must be analyzed under the notion of what concept?

Back 4

Behavior can only be analyzed within a "relevant range" due to costs not behaving consistantly over a wide range

Front 5

What is relevant range?

Back 5

A range in production volumes where:

1. Total fixed costs remain constant
2. Unit Variable costs remain constant
3. Unit sales price remain constant

Front 6

All costs behavior patterns are valid only within...

Back 6

A relevant range

Front 7

In a relevant range, total fixed costs remain constant and unit fix costs do what?

Back 7

Vary inversely

Front 8

How do total variable costs behave when production volume changes?

Back 8

Varies directly