1. Basic Costing Homework Recap

2. Basic Costing Lesson 3 Chapter 3 Cost behaviour

3. Objectives Explain fixed, variable, semi-variable and stepped behaviour costs. Distinguish between fixed, variable, semi-variable overheads Identify the types of cost and profit centres.

4. Cost Behaviours Fixed costs Variable costs Semi–variable or Semi-fixed costs Stepped costs

5. Fixed Expenses Do not change with changing levels of production EXAMPLES: Rent and rates Cleaner’s wages

6. What would a fixed cost look like on a graph Total cost Output Units

7. Fixed costs - Answer

8. Would it look different for fixed cost per unit? Cost p/unit Output Units

9. Fixed costs per unit - Answer

10. Variable Costs Vary directly with changes in levels of production EXAMPLES: Material Labour

11. What would a variable cost look like on a graph? Total cost Output Units

12. Variable cost - Answer

13. Would it look different for variable cost per unit? Cost p/unit Output Units

14. Variable cost per unit - Answer Cost p/unit Output Units

15. Semi-fixed, Semi-Variable Part of cost remains fixed at any production level Part of cost changes with changing production levels EXAMPLES: Power, telephone Production workers wages (standard wage+ bonus)

16. What would a semi-variable/fixed cost look like on a graph? Total cost Output Units

17. Semi-variable/fixed - Answer

18. Stepped Fixed over a particular range Above this range steps up Examples include ratio of supervisors to operators Number of machines being used

19. What would a stepped cost look like on a graph? Total cost Output Units

20. Answer

21. Cost Centres Cost / Expense Section of a business costs can be charged Department, branch i.e. PRODUCTION COST CENTRE Profit Both costs and income directly related to it Investment

22. Recap Types of cost behaviour Graphical representation of costs Cost centres