ABSTRACT
At the end of this chapter you should:
Know when it is appropriate to use differential costs in an analysis.
Understand the distinction among fixed, variable, step-function, and semi-variable costs.
Be able to perform a relatively simple cost-volume-profit (CVP) analysis.
Understand the distinction between direct and indirect costs (which typically are used in a full-cost analysis) and fixed and variable costs (which should be used in a differential-cost analysis).
Know how to identify the level of risk inherent in an outsourcing decision, and how best to manage that risk.
