There Are Four Common Cost Behavior Patterns That Serve as the Foundation

question 11

Essay

There are four common cost behavior patterns that serve as the foundation for cost-volume-profit analysis.
a.Explain the term cost behavior.
b.List the four common cost behavior patterns that serve as the foundation for cost-volume-profit analysis and give an example of each type of cost classified by behavior.
c.Explain the relationship between level of activity and each of the four types of cost behavior.

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Definitions:

Performance Analysis Tool

A software or methodology used to evaluate the efficiency and effectiveness of performance.

Source Document

Original records that contain important details of business transactions, serving as evidence for accounting purposes.

Biased or Unbiased

A characteristic of information or opinion that shows prejudice for or against something (biased) or represents fairness and impartiality (unbiased).