Question

Cost behavior refers to the manner in which

Answer 1

It's important for organizational management to understand cost behavior so they can better plan and control costs. This also makes budgets and variance reports more effective.
Cost behavior is defined as the change in cost in relation to the change in activity. The three most typical classifications of cost behavior are: variable costs, fixed costs and mixed costs. Variable costs change per unit when the number of units produced change. Fixed costs are total dollar amounts and do not change when the number of units produced changes. Mixed costs have characteristics of both variable and fixed costs.