Management Accounting - unregulated, company specific financial reports for the company’s needs

• used for:
  • decision making
  • planning
  • control

Fixed costs will remain the same but only within a limit eg. capacity of 10-30 students but if there was 35, an extra teacher and extra classroom would be needed

• can have stepped fixed costs on the graph with the limits

Variable costs - cost of materials

Semi-variable costs: costs that contain both a fixed and variable element (base price + cost plus charge)

Step-fixed costs: costs that remain fixed until the output reaches a certain level where the cost increases sharply

Example:

Variable costs - cost of materials (string, frames), wages

Fixed - rent, utilities, salaries

High Low Method

• look at highest level of output and lowest level of output
• eg: low = 150, high =750 - increase of 600 units
• calculate difference between cost of low and cost of high
• eg. low = 175k, high = 475k - increase of 300k