# Shared Flashcard Set

## Details

ACG3341 - Ch10
FSU Fennema Exam 1 Summer B
13
Accounting
05/15/2010

Term
 Why do cost behaviors need to be estimated?
Definition
 Only variable costs are differential in the short run
Term
 What are 5 uses for cost estimation?
Definition
 Decision making Planning Budgeting Variance Analysis Product costing/pricing
Term
 What are the four types of cost estimation?  How do they work?
Definition
 Account Analysis Conference Method Industrial Engineering Method Quantitative Analysis Method
Term
 What does account analysis method do?
Definition
 Estimates cost functions using the linear cost equation.   y = a + bX
Term
 What does the conference method do?
Definition
 Estimates cost functions on feedback from personnel in departments of a company
Term
 What does the industrial engineering method do?
Definition
 Estimates relationships between inputs and outputs in physical terms. Ex: It takes one hour to produce 10 square yards of carpet
Term
 How does the quantitative analysis method work?
Definition
 1) Choose a dependent variable. 2) Choose an independent variable (cost driver). 3) Collect & Plot the data. 4) Estimate a cost function. 5) Evaluate the cost driver of the estimated cost function.
Term
 What are the steps in the High-Low Cost method?
Definition
 1) Solve for variable cost 2) Solve for fixed costs 3)Plus into cost formula
Term
 How do you solve for variable costs?
Definition
 High cost - Low cost High Activity - Low Activity
Term
 How do you solve for fixed costs?
Definition
 Solve for F Y = F + V(x) Y - High cost V - Variable cost just calculated X - High quantity
Term
 How do you put it all together?
Definition
 Total Cost = Fixed + Variable(# of units)
Term
 How does r square interpret in regression analysis?
Definition
 % of costs that are explained by the moves
Term
 What are the dangers of unitizing fixed costs?
Definition
 1) When fixed costs are divided by activity level, they appear to be variable 2) Should never be done for decision making purposes
Supporting users have an ad free experience!