Acc105

Chapter 11 - Cost Behavior ( discussion board):

Please provide your thoughts on this simple example of cost behavior and then add an example of your own.

What do you typically pay for a large pizza? (There is no right or wrong price - just pick a reasonable price) What would be the cost per student if two students buy that pizza? What if four students buy a large pizza? What does this illustrate about why average fixed costs change on a per unit basis?

Let's add the fact that a beverage costs $1 and each student eating the pizza has one beverage. So, if two people were eating the pizza, the total beverage bill would come to $2; if four people, $4. The cost per beverage remains the same, but the total cost depends on the number of people ordering a beverage. What does this tell us about how total variable costs vary per units (or in this case students)?

Please provide another basic example of cost behavior (related to fixed or variable).