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How costs behave as the level of activity/volume changes. Why an understanding of cost behaviour is important ?
Types
Variable e.g. petrol, direct materials
Fixed e.g. car tax, factory rental
Semi-variable (Hybrid) e.g. phone bill. Cost separation is the process of separating the fixed and variable elements of a semi variable cost.
Methods
High – Low Method
Regression Analysis
Cost Separation
Why an understanding of cost behaviour is important ?
Unit Costing
Pricing
Decision Making
Budgeting
Break-even analysis
full explaination with diagram
dentify and explain the many classsification of cost for planning,control,performance evaluation and decision making
explain strategy asa an organisational process
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REGRESSION ANALYSIS A regression equation identifies an estimated relationship between a dependent variable (the cost) and one or more independent variables (the cost driver).
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