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Effects of Altering Cost Behavior in Cost Accounting

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Given the attached list of fixed, variable, and semi variable costs, please help me explore the possibility of altering the cost behavior of two cost components. I need to come up with a way to change a variable cost to a fixed cost, or a fixed to variable, semi to fixed. I need two examples. Please help me understand the pros and cons of altering this cost behavior of these cost components.

For example, Advertising is listed as a "variable" cost. If the company chose to outsource advertising, lets say a 5 year contract at 100k per year, this would change to a fixed cost. What would be the pros and cons?

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The expert examines the effects of altering cost behavior in cost accounting.

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TUTORIAL

In determining whether the behavior, of a cost, can be changed it must be first determined whether the cost can be readily influenced by the firm or organization. A cost can only be influenced if the firm can decide to change its time of effect or total amount charged for a period.

1. Waste disposal: Waste disposal would include all expense incurred in the disposal and packing of waste material. This may be a fixed cost that can be changed to a variable cost. This would involve negotiating a contract that would involve waste collections that are influenced by the quantity and number of times of disposal.
PROS:
A major advantage, of changing a fixed cost to ...

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Chidi Ngene, M. Sc.
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  • B. Sc., University of Nigeria
  • M. Sc., London South Bank University
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