Cost Behaviour

Question 1

What does cost behaviour mean?

Answer 1

Cost behaviour is the way that costs alter changes in the level of output or activity.

Question 2

Three main way costs behave are:

Answer 2

Fixed Costs
Variable Costs
Semi-Variable Costs

Question 3

What is fixed costs

Answer 3

Fixed costs which do not alter when the level of output or activity changes.

Question 4

What is variable costs

Answer 4

Variable costs change in proportion to the level of output or activity

Question 5

What is semi variable costs

Answer 5

Semi Variable costs contain both a fixed element and a variable element. For example: when paying an employee the fixed cost would be their basic pay and the variable cost would be a bonus.