Classifying costs, break-even analysis, contribution and margin of safety, budgeting and variance analysis, and cost and profit centres.
Classifying costs
Fixed costs — do not change with output (rent, salaries).
Variable costs — change directly with output (raw materials).
Total cost = fixed + variable; average (unit) cost = total cost ÷ output.
Direct costs are traceable to a product; indirect costs (overheads) are not.
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