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Activity-Based Costing
In previous posts, we discussed plantwide overhead rates and departmental overhead rates to allocate overhead costs to cost objects. Another method for applying overhead is activity-based costing (ABC). Activity-based
Learn MoreCost Behavior: Introduction to Fixed and Variable Costs
The idea of cost behavior is one of the most important concepts in managerial accounting. Determining how a cost will behave is critical to planning, decision making and controlling. Two types of costs
Learn MoreVariable Cost
When thinking about cost behavior, think about how the cost behaves in total. A variable cost is a cost that varies in total. The cost increases or decreases based on a related activity. The formula for
Learn MoreFixed Cost
Fixed costs can be a tricky business. They might seem simple but if you think too much, you might get tripped up. Just like with variable cost, fixed costs are named because of how the cost behaves in
Learn MoreMixed Cost
As the name suggests, a mixed cost is made up of a mix of variable cost and fixed cost. A cost must have both components to be considered a mixed cost. There are many mixed costs around us. If you look
Learn MoreRelevant range and cost behavior analysis
What is relevant range? Relevant range is one of those REALLY important concepts in managerial accounting. It’s pretty major but it does not get the attention it deserves. Most professors and authors
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