Question

(1) "Describe what is meant by "Cost Behavior".

(2) "Distinguish between a Variable Cost and Fixed Cost (in Total and Per Unit)".

(3) "Described what is a "Mixed Cost".

(4) "Discuss the purpose of uses of the "High-Low Method".

Answer 1

1	Cost behaviour is associated with understanding how cost change in relation to change in level of
	activity in the organisation
2	Variable cost is a cost that changes with the volume of activity. It increase with increase in the volume
	of activity and decreases with a decrease. The per unit variable cost always remains the same but the
	total variable cost changes as per change in the volume of activity
	Fixed cost is a cost that does not change with a change in the volume of activity. It remains the same
	every time. Fixed cost is for the activity as a whole and not for per unit
3	Mixed cost is a cost that remains same upto a level of activity and starts to change after the volume
	of activity exceeds that level. It is a combination of fixed cost and variable cost
4	High Low method is used to separate fixed and variable cost from a mixed cost. It compares the
	cost at high levek of activity with the cost at low level of activity