Question: Knowledge of cost behavior allows a manager to assess changes in costs that result from changes in activity. This allows a manager to assess the

Knowledge of cost behavior allows a manager to assess changes in costs that result from changes in activity. This allows a manager to assess the effects of choices that change activity. For example, if excess capacity exists, bids that minimally cover variable costs may be totally appropriate. Knowing what costs are variable and what costs are fixed can help a manager make better bids.

Could you give example and why is your example VARIABLE or FIX cost? Thank you.

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