A linear cost equation O is derived from two elements - the relevant range and the level of activity. O includes three components - fixed costs, variable costs and mixed costs. O is used to estimate future costs. is fixed when the volume is zero and increases at a constant rate per activity level after that.
A linear cost equation O is derived from two elements - the relevant range and the level of activity. O includes three components - fixed costs, variable costs and mixed costs. O is used to estimate future costs. is fixed when the volume is zero and increases at a constant rate per activity level after that.
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:A linear cost equation
O is derived from two elements - the relevant range and the level of activity.
O includes three components - fixed costs, variable costs and mixed costs.
O is used to estimate future costs.
is fixed when the volume is zero and increases at a constant rate per activity level after that.
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