Managerial Accounting 2
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A method for analyzing cost behavior in which an account is classified as either variable or fixed based on the analyst's prior knowledge of how the cost in the account behaves.
A measure of whatever causes the incurrence of a variable cost. For example the total cost of X-ray film in a hospital will increase as the number of X-rays taken increases. Therefore, the number of X-rays in the activity base that explains the total cost of X-ray film.
All executive, organizational, and clerical costs associated with the general management of an organization rather than with manufacturing or selling.
Committed Fixed Costs
Investments in facilities, equipment, and basic organizational structure that can't be significantly reduced even for short periods of time with out making fundamental changes.
A cost that is incurred to support a number of cost objects but that cannot be traced to them individually. For example, the wage cost of the pilot of a 747 airliner is a common cost of all of the passengers on the aircraft. Without the pilot, there would be no flight and no passengers. But no part of the pilot's wage is caused by any one passenger taking the flight.
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