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Show how cost behavior affects profitability.

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Show how cost behavior affects profitability.

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Your response is 204 words and explains the two types of costs and how changes in activity impacts them and the corresponding profits. Suitable for a novice.

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Cost behavior refers to whether costs fluctuate with activity (typically production or sales or whether it does not change with activity. If the cost changes with activity, it is a variable cost; if it does not change, it is a fixed cost. Let's talk about how each impacts profits.

Variable costs rise with additional activity, such as making more units (and presumably ...

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