5-1 changes in activity. a. Variable cost: A variable cost remains con-stant on a per unit basis, but changes in to-b. Mixed cost: A mixed cost is a cost that con-tal in direct relation to changes in volume. tains both variable and fixed cost elements. b. Fixed cost: A fixed cost remains constant in c. Step-variable cost: A step-variable cost is a total amount, but changes, if expressed on a cost that is incurred in large chunks, and which increases or decreases only in re-per unit basis, inversely with changes in vol-ume. sponse to fairly wide changes in activity. c. Mixed cost: A mixed cost contains both vari-able and fixed cost elements.

1 CHANGES IN ACTIVITY. A. VARIABLE COST

SOLUTIONS TO QUESTION MANAGERIAL ACCOUNTING CH05 COST BEHAIVIOR ANALYSSIS AND USE

5-1

changes in activity.

Variable cost: A variable cost remains con-

stant on a per unit basis, but changes in to-

Mixed cost: A mixed cost is a cost that con-

tal in direct relation to changes in volume.

tains both variable and fixed cost elements.

Fixed cost: A fixed cost remains constant in

Step-variable cost: A step-variable cost is a

total amount, but changes, if expressed on a

cost that is incurred in large chunks, and

which increases or decreases only in re-

per unit basis, inversely with changes in vol-

ume.

sponse to fairly wide changes in activity.

Mixed cost: A mixed cost contains both vari-

able and fixed cost elements.