Question: Why is cost behavior important for managerial decision making? Give an example to illustrate your answer. How does the length of the time horizon affect

Why is cost behavior important for managerial decision making? Give an example to illustrate your answer.

How does the length of the time horizon affect the classification of a cost as fixed or variable?

What is the meaning of short run? What is the meaning of long run?

Why do mixed costs create a problem when it comes to classifying costs into fixed and variable categories?

What is the purpose of the high-low method? What are the advantages of the scattergraph method over the high-low method?

What are the advantages of the high-low method over the scattergraph method? Describe the method of least squares. Why is this method better than either the high-low method of the scattergraph method?

What is meant by the best-fitting line? Is the best-fitting line necessarily a good-fitting line? Explain.

Some firms assign mixed costs to either the fixed or variable cost categories without using any formal method to separate them. Explain how this practice can be defended.

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