Ch11final

• Cost Behavior


  means how a cost will react
• Planning


  requires that management make decisions
• Cost Analysis


  integral part of the planning
• Variable Costs


  cost that change in total
• Relevant Range


  range activity within which assumptions
• activity base


  a measure of whatever causes the incurrence of a variable cost
• fixed costs


  are costs that remain constant
• committed fixed costs


  investment in facilities
• Discretionary fixed costs


  arise from annual decisions
• Mixed Costs


  one that contains both variable and fixed cost elements
• Account analysis method


  considered very useful and easier way to estimate
• industrial engineering method


  estimates cost functions by analyzing the relationship
• conference method


  estimates cost functions on the basis of analysis and opinions about costs and their drivers
• high-low method


  analyzing mixed cost is based on observed cost
• regression analysis method


  uses all available data to estimate
• The Scattergraph, or Visual-Fit, Method

  plot the cost against past activity
• correlation analysis


  management must evaluate whether or not the factor
• learning curve theory


  estimating cost of each input in linear function