6.3: Putting It Together- Cost Behavior Patterns
Product costs, period costs, fixed costs and variable costs and all the combinations are so important to know as a manager. When the accounting department comes to you with a report that shows a higher product cost than budgeted, you will know where to look for discrepancies and ways to save on costs. Not knowing these terms would make analysis of your costs difficult.
In this module we looked at various ways to break down potential mixed costs. In the future, if you notice a correlation between a rise in services or production and a rise in a certain cost, you now have the tools to do an initial analysis and follow up with more details.
Understanding how various costs behave, and how you can manage those costs could mean the difference between a profitable company and an unprofitable one. So let’s move on now to learning how costs and volume analysis can help you manage effectively!