[Paper Solved]What is the meaning of cost behavior and how does the variable cost behave differently than fixed cost –

Cost behavior is the manner in which costs change based on the level of activity or production. It is important for businesses to understand how their costs are related to different levels of production, as this knowledge can be used to make more informed decisions about pricing and cost management. The two main types of cost behaviors are variable costs and fixed costs.

What is the meaning of cost behavior and how does the variable cost behave differently than fixed cost

Variable costs refer to any cost that increases as production increases. An example of a variable cost would be materials or labor needed for a specific product; these costs increase with each additional unit produced. Variable costs are typically lower in the short term because they only increase when there is an increase in output. In addition, variable costs tend to be predictable since they remain relatively stable over time due to their relationship with output levels.

Fixed Costs refer to any cost that does not change regardless of the level of output produced or activity completed. An example of a fixed cost would be rent or insurance payments; regardless if one unit or one hundred units were produced, these expenses do not change (unless there’s an agreement between parties). Fixed costs tend to stay constant over time, making them less risky than variable expenses when budgeting for future activities and outputs.

The major difference between variable and fixed costs is that while fixed expenses remain largely unchanged over time, variable expenses vary depending on activity or output levels – meaning they can either increase or decrease at different times during operations. For example, when production increases sales revenue will also rise but so too will labor hours resulting in higher wages paid out (variable expense). Conversely, should sales decline then fewer raw materials may need purchasing thus decreasing material expense (again another form of variable expense). As such it’s important for businesses acknowledge this difference so as better manage both types of expenses throughout operations and/or plan appropriately within longterm budgets/plans accordingly ensuring cash flow remains positive at all times without unnecessary strain being placed upon resources available.

Place your order
(550 words)

Approximate price: $22

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
The price is based on these factors:
Academic level
Number of pages
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more