Cost Behavior

Cost Behavior, Contribution Margin Income Statement
Introduction
This video lecture course from Kelley School of Business, Indiana University, the announcer Rebecca P. Trax (adjunctacountingfaculty) talks about introduction Accounting and Business, Basic Accounting and Financial Reporting Concepts, The Business Organization & Financing, Business Performance, The Accounting Cycle,Analytical Review & Cash, Relevant Information for Managerial Decisions, Capital Assets, External Financial Reporting and External Reporting for Public Companies.
Content
The video talks about thedifferent kinds and behaviors of costs. Cost behavior refers to the fact the cost change in relationship to activity changer., like increases or decreases in sales, or when or manufacturing quantitiesgo up or down cost change, but it’s important to know that they don’t always change in direct proportion in the activity level.
The most important in this text is understand how classify thedifferent types of cost.
1. Fixed costs: A cost that does not vary depending on production or sales levels, such as rent, property tax, insurance, or interest expense.



2. Variable costs: areexpenses that change in proportion to the activity of a business.



3. Mixed costs:, have characteristics of both fixed and variable costs. Some example of this cost is the electricity bill at home,where we pay a fixed component as rent for the meter and a variable component depending on the contex.



The video talks about what would happened in different levels in the next Graph ofFixed, Variable and Mixed Costs
$ COST 1400

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0 30 60 90
PRODUCCTION LEVEL

In this graphic up the top we can seethe fixed cost during the level of production never change and always is the same. The variable cost start in cero when you don't have any production and goes up when grow up the production. he mixed...