Accounting › Section P · Managerial accounting and cost behavior › Topic P.5
Variable, fixed, and mixed costs
If a business makes twice as many products next month, will its costs double? Some will, some will not move at all, and some will do a bit of both. Knowing which is which is the foundation of budgeting, pricing and almost every decision in the managerial half of this course.
In this topic
- How costs respond to activity
- Variable costs
- Fixed costs
- Worked example: totals and per-unit costs
- The relevant range
- Step costs
- Mixed costs
- Worked example: an extra order
- Classifying familiar costs by behaviour
- Common mistakes to avoid
- Key takeaways
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