4. Can you think of reasons other than those suggested by the scenario that makes it important for managers to understand cost behavior? Understanding cost behaviors are important for the managers because it helps them assess the changes and its effect in cost from the changes of activity. It also helps them to know the cost efficiency of the production in order to make decisions that would result to reducing of total cost incurred on activities, increase of sales volume and ultimately, high return of profits. Lastly, it will help them make wise decision making because it affect not just the production but the whole organization. 1. Reducing the demand for the rework activity would surely allow the cost of the rework activity to decrease which increases its overall efficiency; however, the resource spending will not reduce for this activity proportionately since resource spending is the cost of acquiring the capacity to perform an activity. Also, there is a difference between resource spending from recourse usage because resource usage refers to the amount of activity capacity used in producing the activity output or simply the amount of activity actually being used. In assigning the total cost of the product, the cost of the activity actually used is assigned since using less of the activity being supplied is possible. 2. Knowing the total cost of rework activity and the total number of units reworked, it is still possible for the organization to determine the total of variable and fixed cost since there are various formulas and methods we could use in computing this. Furthermore, knowing and understanding the behavior of variable and fixed cost is important because it allows the organization to identify the profitable price level for its products or services