Answer : Cost
behavior analysis :
- Cost behavior analysis refers to management attempt to
understand how operating costs change in relation to
organizational's level of activity.
- Cost behavior analysis for developing a product =
Cost of Direct material + Cost of Direct labour + Overhead
costs.
- This cost may easily vary with the level of actitivities
perfomed by management.
- This cost can also be termed as Variable costs.
Importance of
Cost behavior analysis to management :
- Cost behavior analysis helps management in planning business
operations and choosing among alternative cources of action.
- This Cost study make management able to understand that how
certain cost behave in business.
- It hepls managenet in choosing best course of action in which
cost is low and profit will bw maximised.