Costs In Management Accounting

Question 1

Cost that both Variable and Fixed Component

Answer 1

Mixed Cost

Question 2

Separation of Fixed and Variable Components of Mixed Costs
3

Answer 2

1. High-Low Method

Regression Analysis Method
2. Scattergraph Method
3. Least Squares Regression Method

Question 3

Costs Mgmt

How to apply High-Low cost estimation method?
Please provide 2 steps

Answer 3

1. Estimate variable cost per unit or rate using the ff equation:

Variable cost rate or per unit = (cost at highest activity-cost at lowest activity)÷(highest activity-lowest activity)

2. Compute fixed cost as follows:

Fixed Cost= Total Cost at HIGHEST activity - (variable cost perunit × HIGHEST ACTIVITY STATED IN UNITS)

OR

FC = Total Cost at LOWEST activity - (variable cost perunit × LOWEST ACTIVITY STATED IN UNITS)

NOTE:
Laging nasa taas o una ang PERA!
That is applicable for units or hrs

Question 4

Costs in Mgmt Acctg

Provide two types of Fixed Costs

Answer 4

1. Committed Fixed Costs (Unavoidable Costs)
   -building and equipment depreciation
2. Doscretionary / Managable Fixed Costs (Avoidable Fixed Costs)
   -e.g research and development costs, advertising expenses

Question 5

Costs in Mgmt Acctg

______ - when activity changes, this will shifts upward or downward by a certain interval step

Answer 5

Step Cost

Question 6

Costs in Mgmt Acctg

Prime costs compose of?

Conversion Costs compose of?

Answer 6

1. DM and DL
2. DL and FO

Question 7

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