(WIP) ACC 350 Exam 1 Study Material
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Pg. 5<br />
Sarah Allison Takash<br />
<strong>ACC</strong> <strong>350</strong>, Spring 2018<br />
<strong>Exam</strong> 1 <strong>Study</strong> <strong>Material</strong><br />
i. Level of activity<br />
ii. Volume of production<br />
d. Note that:<br />
i. Fixed costs have no cost driver in the short run but may have a cost driver in the<br />
long run.<br />
9. Fixed costs (within a relevant range)<br />
a. Total fixed costs:<br />
i. Are constant<br />
1. Unchanged, despite significant changes in levels of total activity or volume.<br />
when considering fixed costs, always focus on total costs.<br />
b. Per unit fixed costs<br />
i. Are inversely proportional<br />
1. Decrease as the activity level or volume increases<br />
c. Cannot be easily changed in the short run, rather are changed<br />
in the long run by managerial decision making<br />
d. <strong>Exam</strong>ples:<br />
i. Salaries to plant supervisors<br />
ii. Labor union agreements to set workers<br />
hours/compensation<br />
10. Variable costs<br />
a. Total variable costs:<br />
i. Are proportional within a relevant range<br />
1. Total variable cost changes in proportion to changes in the related level of<br />
total activity or volume of output produced.<br />
ii. graphed as a diagonal, upward sloping line<br />
b. Per unit of activity:<br />
i. Is constant within a relevant range<br />
ii. Is graphed as a horizontal line<br />
c. <strong>Exam</strong>ples:<br />
i. Hourly wages