Page 12 - PowerPoint Presentation

RECAP

Cost Terms And Concepts

• Variable cost is a cost that varies, in total, in direct

proportion to changes in the level of activity or

volume. The variable cost per unit is constant within

a relevant range.

• Semi-variable or mixed cost contains both fixed and

variable cost. The mixture of cost includes a fixed

amount within a relevant range of output and an

amount that varies proportionately with output

changes.

• The relevant range is the upper and lower levels of

production (= sales) activity levels within which the

organisation normally operates and for which cost

and revenue behaviour are known and can be

predicted.

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