BUS 254 Chapter Notes - Chapter 6: Cost Driver, Variable Cost, General Ledger

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 254
• Professor: Arsineh Garabedian

Document Summary

Behaviors of cost are important to control and make decisions: cost estimation o. Process of determining cost behavior, often focusing on historical data: cost behavior, relationship between cost and activity, cost prediction o o a forecast of cost at a particular level of activity. Cost that remain constant on a per-unit basis but change in total in direct response to and proportionally with cost-driver changes o. Tuition fee the relationship may be demonstrated as a straight line (assume per course) B is the slope (in this case, the cost of tuition fee) Nearly variable, but costs increase in small steps rather than in direct proportion to cost-driver changes. Inputs are purchased and used in relatively small increments. If the steps are small, it may be approximated by a variable cost function without much loss o. Assume that your school requires one exam invigilator for every 25 students at a cost of per invigilator.