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Variable Costs
Are costs such raise or fall proportionately along with the level of activity that is such portion of the cost of an activity which changes along with the level of output.
Notice here that along with variable costs, the cost level is zero while production is zero. The cost rise in proportion to the rise in the activity level, hence the variable cost function is represented via a straight line from the origin. The gradient of the function signify the variable cost per unit.
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Direct Materials Budget This budget implies the estimated quantities and costs of every the raw materials and components desired for the output demand by the production budget
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