1 / 6

Basic Managerial Accounting Concepts

Basic Managerial Accounting Concepts. Cost Behavior: Fixed Costs Fixed vs. Variable Relevant range: normal production levels Behavior of fixed costs as production increases Implications for pricing of products?. Basic Managerial Accounting Concepts. Cost Behavior: Variable Costs

sage-booth
Download Presentation

Basic Managerial Accounting Concepts

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Basic Managerial Accounting Concepts Cost Behavior: Fixed Costs • Fixed vs. Variable • Relevant range: normal production levels • Behavior of fixed costs as production increases • Implications for pricing of products?

  2. Basic Managerial Accounting Concepts Cost Behavior: Variable Costs • Vary directly with output • Linear relationship • Reasonable assumption? • Quantity discounts?

  3. Basic Managerial Accounting Concepts Cost Behavior: Step Costs • Step costs: fixed for small ranges of output • Adding sections of class • So overall variable, but not linear

  4. Basic Managerial Accounting Concepts Cost Formula: Total Costs = Fixed Costs + VCU x Units • Total Costs = Dependent variable • Fixed Costs = Intercept • Variable Costs = Slope; independent variable

  5. Basic Managerial Accounting Concepts Cost Behavior: Mixed Costs • Partially variable and partially fixed • Separating mixed costs into variable and fixed • High low method • Variable Cost Per Unit= (High Cost – Low Cost) / (High Output – Low Output) • Fixed Cost= Total Cost – (Output x Variable Cost) • Can use output/costs at high or low outputs

  6. Basic Managerial Accounting Concepts Cost Behavior: Mixed Costs • Separating mixed costs into variable and fixed • Least squares • Best fit line of observation points • Intercept: fixed costs • INTERCEPT FUNCTION • X Variable: variable costs per unit • SLOPE FUNCTION

More Related