Istinction Between Fixed & Variable Costs
This module serves as an introduction to mixed costs. Distinctions between fixed and variable costs are important. As activity changes total fixed costs increase, but fixed costs remain constant. This is accurate within the relevant range. Activity changes outside the relevant range can result in increases in either fixed or variable costs.
Your discussion topic is to describe how the firm where you work distinguishes between fixed and variable costs. Provide specific examples. In addition, explain whether fixed cost items or variable cost items get any priority in your firmas internal decisions to distribute available funds. If you are not directly involved in managerial accounting, you may want to discuss these questions with a Chief Financial Officer and share the information with your classmates.
Being able to classify costs is important to the firm. Cost classification helps determine product selling price and predict profitability. This activity challenges you to analyze cost classifications. Watch the following video in the link below, discuss how the firm you work for determines fixed and variable costs for future cost predictions, e.g., the criteria used to determine fixed costs and the criteria used to determine variable costs. Provide specific examples. If you are not directly involved in managerial accounting, you may want to discuss these questions with the chief financial officer. Please provide the sources.