BU247 Lecture Notes - Lecture 2: Sunk Costs, Fixed Cost, Variable Cost
Document Summary
Will budget for fixed costs based on a set interval of units the company will be able to produce in a short term. Reasonable assumption, seeing as you can"t add or reduce capacity in the short term. Fixed and variable cost associated with a product. Can get a set salary, plus a commission for each unit sold after a set amount is already sold. Costs different flat amounts based on the interval amount of units sold. Cost that changes as the result of a decision. No- have a bus pass that has already been paid for. "not relevant in the decision making process as it is a cost regardless of what decision is made"--it is very relevant, however. lost regardless of whether you sell it or not. Beliefs about the future value of the product is involved in the decision making process. Pursuing a course of action long after an objective outsider would pursue that action.
