Cost Classification — purpose?
Aids in budgeting, control, and decision-making.
Cost Behavior — definition?
How costs change with activity levels.
Job Order Costing — suitable industry?
Customized or unique product industries.
Cost Classification — purpose?
Aids in budgeting, control, and decision-making.
Direct Costs — example?
Raw materials or direct labor.
Indirect Costs — example?
Utilities, administrative expenses.
Fixed Costs — definition?
Constant in total regardless of activity.
Variable Costs — example?
Raw materials, direct wages.
Mixed Costs — example?
Utility bills with fixed + usage fees.
Cost Behavior — importance?
Predicting costs at different activity levels.
Answer 10 questions on Mastering Cost Classification and Behavior.
1. What does cost classification refer to in managerial accounting?
2. According to cost behavior concepts, what is a defining characteristic of fixed costs?
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