EXERCISE 5-12 (30 MINUTES)
2. Without a knowledge of the underlying cost behavior patterns, it would be difficult if not impossible for a manager to properly analyze the firm’s cost structure. The reason is that all costs don’t behave in the same way. One cost might move in one direction as a result of a particular ac-tion, and another cost might move in an opposite direction. Unless the behavior pattern of each cost is clearly understood, the impact of a firm’s activities on its costs will not be known until