Distinguishing between different cost classifications

Various types of costs are likely to behave in a different manner from each other.
The cost accountant is only concerned with the relevant range of activity where:

• Organisation normally operates;
• The cost estimates will apply.

In the relevant range of activity, most items settle into a basic pattern of behaviour:

• Fixed
• Variable
• Semi-variable.

If the relevant range changes significantly, it is necessary to review cost estimates.

The focus of an accountant is narrow.

A limited span of activity is being considered.
It is important to distinguish between cost classifications:

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