ECONOMICS

Detailed explanation-1: -Cost behavior analysis refers to management’s attempt to understand how operating costs change in relation to a change in an organization’s level of activity. These costs may include direct materials, direct labor, and overhead costs that are incurred from developing a product.

Detailed explanation-2: -Cost behavior analysis is the study of how specific costs respond to changes in the level of activity within a company.

Detailed explanation-3: -Cost-volume-profit (CVP) analysis is a way to find out how changes in variable and fixed costs affect a firm’s profit. Companies can use CVP to see how many units they need to sell to break even (cover all costs) or reach a certain minimum profit margin.

Detailed explanation-4: -Cost behavior is the manner in which expenses are impacted by changes in business activity. A business manager should be aware of cost behaviors when constructing the annual budget, to anticipate whether any costs will spike or decline.

Detailed explanation-5: -The answer is option C. The cost behavior refers to how the cost responds at various levels of production or business activity. Variable costs are costs that change in total and proportionately as the level of activity changes.