Costs and Decision Making Chapter 5 Cost Behavior and Relevant Costs Chapter 6 Cost-Volume-Profit Analysis and Variable Costing Chapter 7 Short-Term Tactical Decision Making Chapter 8 Long-Term (Capital Investment) Decisions Part 2 139 140 Cost Behavior and Relevant Costs Chapter 5 Understanding the behavior of costs is of vital impor￾tance to managers. Understanding how costs behave, whether costs are relevant to specific decisions, and how costs are affected by income taxes allows managers to determine the impact of changing costs and other factors on a variety of decisions. This chapter introduces concepts and tools that will be used in Chapters 6 through 8. Chapter 5 begins with a definition of cost behavior and illustrates the concepts of fixed costs, variable costs, and mixed costs. Next, the chapter revisits the concept of relevant costs (introduced in Chapter 1) as it applies to variable and fixed costs. The chapter also describes the impact of income taxes on costs. Learning Objectives After studying the material in this chapter, you should be able to: Describe the nature and behavior of fixed, variable, and mixed costs Analyze mixed costs using regression analysis and the high/low method Distinguish between relevant and irrele￾vant costs and apply the concept to decision making Illustrate the impact of income taxes on costs and decision making 2 3 4 Chapter 5 Cost Behavior and Relevant Costs 141 1