1. Why is knowledge of cost behavior important for managerial decision making? Give an example to illustrate your answer.
2. What is a driver? Give an example of a cost and its corresponding output measure or driver.
3. Suppose a company finds that shipping cost is $3,560 each month plus $6.70 per package shipped. What is the cost formula for monthly shipping cost? Identify the\ independent variable, the dependent variable, the fixed cost per month, and the variable rate.