Identify and describe cost behaviour characteristics for the

Identify and describe cost behaviour characteristics for the different cost elements of a product or service

Solution

COST BEHAVIOUR IS THE CHARACTER OF THE RELEVANT COST WITH THE CHANGES IN SITUATIONS COST MAY FLCTUATE WITH THE CHANGES IN THE NUMBER OF UNITS PRODUCED OR SERVICESE RENDERED. IT MAY CHANGES WITH THE PASSAGE OF TIME OR WE CAN SAY THAT IF PERIOD INCREASE, SOME COSTS GETS INCREASED SOMETIMES IT MAY CHANGE WITH THE CHANGES IN THE CAPACITY OF THE MANUFACTURING OR STORAGE UNITS. GENERALLY COST OF THE PRODUCT OR SERVICES INCLUDES FOLLOWING COST. NAME OF THE COST NATURE OF THE COST DIRECT MATERIAL VARIABLE COST INCREASE OR DECREASE IN SAME PROPORTION WITH THE INCREASE OR DECREASE IN NO. OF UNITS PRODUCED OR SERVICES PERFORMED DIRECT LABOR VARIABLE COST INCREASE OR DECREASE IN SAME PROPORTION WITH THE INCREASE OR DECREASE IN NO. OF UNITS PRODUCED OR SERVICES PERFORMED DIRECT EXPENSES RELATING TO PRODUCTION OR SERVICES VARIABLE COST INCREASE OR DECREASE IN SAME PROPORTION WITH THE INCREASE OR DECREASE IN NO. OF UNITS PRODUCED OR SERVICES PERFORMED OVERHEADS COST RELATING TO MANUFACTURING ACTIVITY OR SERVICE PROVIDING LIKE- RENT FIXED EXPENSES IT CHANGES WITH THE INCREASE IN PERIOD, OR WITH INCREASE IN CAPACITY ELECTRICITY SEMI VARIABLE SOME PROPORTION IS FIXED WHILE OTHER COST INCREASE WITH THE INCREASE IN ACTIVITY LEVELS REPAIRS AND MAINTENANCE SEMI VARIABLE SOME PROPORTION IS FIXED WHILE OTHER COST INCREASE WITH THE INCREASE IN ACTIVITY LEVELS PRODUCTION MANAGER SALARY AND INDIRECT WAGES FIXED EXPENSES IT IS FIXED FOR A PARTICUALR PERIOD IRREVANT TO THE LEVEL OF ACTIVITY PERFORMED. IT CHANGES WITH THE INCREASE IN PERIOD. OVERHEADS COST RELATING TO ADMINISTRATION ADMIN EXPENSES FIXED IT IS FIXED FOR A PARTICUALR PERIOD IRREVANT TO THE LEVEL OF ACTIVITY PERFORMED. IT CHANGES WITH THE INCREASE IN PERIOD. SELLING OVERHEADS RELATING TO PRODUCT OR SERVICES ADVERTISEMENT EXPENSE SEMI VARIABLE SOME PROPORTION IS FIXED WHILE OTHER COST INCREASE WITH THE INCREASE IN ACTIVITY LEVELS DELIVERY AND TRANSPORTATION SEMI VARIABLE SOME PROPORTION IS FIXED WHILE OTHER COST INCREASE WITH THE INCREASE IN ACTIVITY LEVELS SELLING COMMISSION VARIABLE COST INCREASE OR DECREASE IN SAME PROPORTION WITH THE INCREASE OR DECREASE IN NO. OF UNITS SOLD OR SERVICES PERFORMED SALES MANAGER SALARY FIXED EXPENSES IT IS FIXED FOR A PARTICUALR PERIOD IRREVANT TO THE LEVEL OF ACTIVITY PERFORMED. IT CHANGES WITH THE INCREASE IN PERIOD.