Module+3000+I+Introduction+and+Learning+Objectives

**Cost Behavior and the Cost Equation**
 * I. Module 3000 Introduction and Learning Objectives rpc**

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 * The purpose of this wiki module is to enable you to understand how costs change as activity changes and how to express these changes in an algebraic equation.**
 * Cost behavior describes the way a cost reacts to a change in the level of business activity. If the level of activity rises or falls, then a particular cost may rise or fall, or sometimes remain constant. Managers need to be able to anticipate changes in cost for purposes such as budgeting, controlling, planning, and decision making.**
 * Cost behavior can be expressed in a cost equation. This equation can become a powerful tool for us because we can use it for planning, budgeting, and controlling. The cost equation is expressed as follows:**
 * y = a + b(x) where as:**
 * y = total costs**
 * a = total fixed costs**
 * b = variable costs per unit**
 * x = total units or volume**

**Learning Objectives for this module:**
 * 1) **Define and learn to identify variable, fixed and mixed costs **
 * 2) **Define and learn to identify activity drivers **
 * 3) **Learn to develop cost equations **

