Module+3000+X+Summary+and+Conclusions

**X. Module 3000 Summary and Conclusions** **rpc**


 * Being able to understand cost behavior, how costs change as output/volume changes is essential to effective budgeting, establish selling prices, and predict cash flows are just some of the benefits of understanding cost behavior. Understanding if a specific cost is fixed, variable, step-variable, step-fixed, or mixed is an important to planning and decision making, as well as understanding the activity drivers that explain changes in activity costs by measuring changes in output/volume. If you and your friend start a company that produces sparkplugs for the automotive industry, how much should you charge for one sparkplug in order to stay in business? How many sparkplugs should be sold in any given month to cover your costs of sales and production? You can answer these questions if you have some basic knowledge of cost behavior.**