Cost Behavior Analysis is the study of how costs change in relation to changes in business activity levels. It helps businesses understand fixed, variable, and mixed costs. Fixed costs remain constant regardless of production levels, while variable costs fluctuate with production volume. Mixed costs contain both fixed and variable components. By analyzing cost behavior, companies can make informed decisions about budgeting, pricing, and financial forecasting. This analysis aids in identifying the break-even point, which is crucial for determining the minimum sales needed to cover costs. Understanding these dynamics supports better strategic planning and resource allocation.