Page 69 - F2 - MA Integrated Workbook STUDENT 2018-19
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Cost classification
Cost behaviour
Cost behaviour refers to the way in which costs are affected by fluctuations in the
level of activity.
Activity can be, for example:
the number of units produced or sold
miles travelled
hours worked
the number of parcels delivered.
3.1 Variable costs
A variable cost is a ‘cost that varies in direct proportion with a measure
of activity’.
Examples of variable costs:
Direct material
Direct labour
Variable overheads
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