Cost Accounting

Behavioural Costs

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Content Contributors
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Priya Kaur

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Christian Bien

Learning Objectives

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Fixed Costs
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Fixed costs are costs that do not change when the level of production increases or decreases. Fixed costs remain the same for a period of time. For example, rent is a fixed cost as it does not change if a manufacture's production increases. 


Some other fixed costs could include: 

  • Marketing/advertising fees 

  • Insurance 

  • Interests on loan 

  • Depreciation on assets

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Variable Costs
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Variable costs are costs that change when the level of production increases or decreases. Variable costs change in line with a manufacturer's production. For example, wages is often a variable cost as if production increases, more labour hours is required to increase the volume of output. 


Some other variable costs could include: 

  • Electricity 

  • Fuel costs 

  • Water consumption

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Mixed Costs
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Mixed costs are costs that include both features of fixed and variable costs. For example, a telephone expense could charge a fixed-line rental (fixed cost) and an additional cost based on the number of phone calls made (variable cost). 


Some other mixed costs could include: 

  • Payment Systems - often charge a monthly cost and then payment fees associated with each transaction. 

  • Water - Often includes a monthly service fee plus an additional cost per litre used.

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Time Orientation of Costs
Treatment of Costs
Relationship Costs
Behavioural Costs
Concept and Calculation of Mark Up
Direct Material Price Variance
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