MA - C2
2.1 demonstrate an understanding of concept of cost behavior
2.2explain the different types of cost behavior
2.3describe different cost estimation techniques
2.4apply estimation techniques to determine the cost function
2.5apply regression analysis in cost estimation
2.6reflect on the uses and limitations of cost estimates
2.1cost behavior at the operational level is the variation in costs relative to the variation in an organisation\'s activities
2.2 total variable costs change proportionately with changes in activity levels
total fixed costs do not vary with small changes in activity levels - often increase in a stepwise linear manner
reality- many mixed costs
a relevant range is a span of activity for a given cost object where both total fixed costs and variable costs per unit of activity remains constant
marginal cost is the incremental cost of an activity, such as producing a unit of goods or services
TC=F+V*Q
cost driver- some input or activity that causes changes in total cost for a cost object.