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Chapter 19 - Cost Behavior and Cost-Volume-Profit Analysis Instructional Guide Cost Behavior-manner in which cost changes as related to activity (production or use) changes Variable costs-costs vary in proportion to changes in the activity base Fixed costs-costs that remain the same even though activity base changes Mixed costs/semivariable/semifixed costs costs are a combination of VC and FC TC=VC + FC High-Low Method (p. 888) to determine: VC per unit V Projected TC TC High $61,500 Low 41,250 Units 2,100 750 Cost-Volume-Profit Relationships- examining the relationships among selling prices, sales and production volume, costs, expenses and profits Contribution margin Sales VC Unit Contribution margin = SP-VC Contribution margin ratio CM/Sales Unit Contribution margin ratio Unit CM/Unit SP Sales (50,000* $20) VC (50,000 $12) FC $300,000