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GE Hca15 PPT ch02
GE Hca15 PPT ch02
Change
Change
inversely
inversely with
with
Fixed Costs Unchanged in
output
output
relation to output
Unchanged in
Fixed Costs More
More output
output == lower
lower
relation to output costcost
per unit
per
unit
Copyright © 2015 Pearson Education
2- 13
Copyright © 2015 Pearson Education
2- 14
Cost driver—a variable, such as the level of
activity or volume, that causally affects costs
over a given time span.
Relevant range—the band or range of normal
activity level (or volume) in which there is a
specific relationship between the level of
activity (or volume) and the cost in question.
Forexample, fixed costs are considered fixed
only within the relevant range.