1. (a) What is cost behavior analysis? (b) Why is cost behavior analysis important to management? 2. (a) Scott Winter asks your help in understanding the term "activity index." Explain the meaning and importance of this term for Scott. (b) State the two ways that variable costs may be defined. 3. Contrast the effects of changes in the activity level on total fixed costs and on unit fixed costs.

4. J. P. Alexander claims that the relevant range concept is important only for variable costs. (a) Explain the relevant range concept. (b) Do you agree with J. P.'s claim? Explain.

5. "The relevant range is indispensable in cost behavior analysis." Is this true? Why or why not?