University:
McMaster University
Course:
ACC 928 | Introductory Management Accounting
Academic year:

2022
Views:

188

Pages:

2
Author:

Sabrina S.

Ch 3 Cost Behaviour Understand the difference blw variable/Fixed costs Variable Cost: costs that change in total direct proportion to changes in Volume. Fixed Cost costs that do not change in total despite wide changes in Volume When volume changes, recognize how fired/ variable costs will change/not change Understand/Apply / Manipulate the formula for operating profit o Sales Variable Cost and/or Fixed Corts Operating Profit Understand the format of a cost equation where, y = total cost V slope / variable cost component stol vdume of activity F= constant / fixed coct comparent o Total, Mixed Costs as volume I because of Variable cost component- Mixed costs per unit, as volume + because of the fined cast component Total mixed cost graphs slope upward but do not begin of the origin, they intersect the yeonis it the level of fived corte Total mosed coste Total mured cols can be expressed as a combination of the variable/fined cast equations = variable cost component + = vx+f Cixed cost component Understand the thigtu Louw Method to estimate cost equation in the fom yurait High-Low Method estimates variable & fixed cost components of a mined cost Understand the torm Relevant Range & has it impacts cest luchouibur Relevant Range: the band of volume where the following remain constant in cost behaviour means a change to a different relevant range Ford Corte Variable cost per unit A change Recognize/Interpret the results of a regression analysis. Regression Analysis: Statistical procedure for determining the line & cost equation that best fits the data by using all of the data points, not just high-low data points. AKA: The line of best fit. More accurate than high-low. A statistic (called the R-square) generated by analysis also tells us how well the line fits the data points. Understand/Calculate income under both variable & absorption. Method Direct Labor DM OH Fixed MOH Variable Variable Variable Variable 0 Absorption Variable Variable Fixed Fixed