It can further be extended to see the changes on the fixed cost, prices of commodity etc, in other words it shows the lowest amount of money to run the business, which is necessary to avoid losses.
Discussion Question 2 Managerial Accounting
Solution Set for Fundamental Assignment Material
Exercise 3-Al: "Types of Cost Behavior"
The cost behaviors for the given planned costs are:
The first planned cost's behavior is the “Discretionary fixed cost”.
The second planned cost's behavior is the “Purely variable cost with respect to revenue”.
The third planned cost's behavior is the “Purely variable cost with respect to ...