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).
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
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
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
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