Cost behaviour analysis focuses on
A) how costs respond to changes in profit
B) how costs change over time
C) how costs change as output changes
D) none of the above

Question

Quizplus · Accepted Answer

Cost behaviour analysis focuses on how costs change as output changes, also known as the relationship between costs and volume of activity. This is important in understanding the cost structure of a business and how changes in production levels can impact total costs. Option A is incorrect as costs do not respond to changes in profit, but rather changes in volume of activity. Option B is incorrect as cost behaviour analysis is concerned with the relationship between costs and volume of activity, not changes over time. Option D is incorrect as cost behaviour analysis is a fundamental concept in management accounting.

Cost Behaviour Analysis Focuses on