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I’m not sure what “Departmental Costs” mean in the context of the following extract from the BPP MA study text. Do “Departmental Costs” mean non-production costs?
“Assumptions about cost behaviour include the following.
(a) Within the normal or relevant range of output, costs are often assumed to be either fixed,
variable or semi-variable (mixed).
(b) Departmental costs within an organisation are assumed to be mixed costs, with a fixed and a
variable element.
(c) Departmental costs are assumed to rise in a straight line as the volume of activity increases. In other words, these costs are said to be linear.”Departmental costs are cost incurred in one particular department of the business. For example, there might be several production departments doing different things, there might be a sales department, there might be an administration department etc..
It is not really anything to worry about for the exam.
If you are watching my free lectures then you do not really need the Study Text. The lectures are a complete free course and cover everything needed to be able to pass Paper MA well. The book that is essential (however you choose to study) is the Revision Kit because it contains lots of exam-standard questions for practice, and practice is vital to passing the exam 🙂
Thank you, I’m trying to use both the Study Text and the OpenTuition Lectures because there are some things in the Text that aren’t included in the Lectures. For example there was a Revision Kit question asking to identify the cost graph that illustrated a quantity discount on raw materials. That type of graph wasn’t covered in the Opentuition notes.
That is true. However I do explain how variable and fixed costs affect the graphs. The examiner is clever at picking different situations deliberately to check that you understand as opposed to having simply learned rules. It is not possible to lear the graph for every situation that the examiner can think of, but if you understand then it should be easy enough to sort out 🙂
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