1. What is the meaning of cost behavior and how does the variable cost behave differently than fixed cost (per unit & total)? Define cost estimation, explain its purpose, and explain its strategic role. What is the meaning of break-even point and why do firms use it? Search the internet and find examples of companies that use the break-even point. How is cost behavior used to analyze risk and profitability for companies and what is the role of operating leverage?
2. Define relevant costs and provide examples of four different decisions for which the relevant cost analysis model can be used effectively. How do strategic factors affect the proper use of relevant cost analysis? Some companies outsource some of their functions to reduce the cost and/or increase their profits. What are the pros and cons of outsourcing? Search the internet and find an example of a company that outsources and the type of function(s) outsourced.
3. What is the relationship, if any, between the relevant cost analysis methods and cost-volume, profit analysis?
Support your answers using resources available on the IMA website. (https://www.imanet.org/insights-and-trends?ssopc=1)
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