# doc 6 - Methods of Separating Fixed and Variable Costs from...

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Methods of Separating Fixed and Variable Costs from Semi-Variable Costs. There are several methods that can be used to identifying the fixed and variable elements of semi-variable costs. Each method is only an estimate and each will produce different results. These methods include: a) Accounts Classification Method b) Industrial engineering method c) The high-low method d) Lines of best fit i) The scatter graph method ii) The regression analysis method 3.3.1 Accounts Classification Method. This is the easiest cost estimation method. It entails making a keen observation of the various accounts in the ledger and identifying them as either being fixed or variable. It is merely a rule of the thumb estimate and can give a reasonable estimate if a thorough observation on the accounts in the ledger is done. The major disadvantage with this method is that it is not scientific and different 3.3.2 The Industrial Engineering Approach This method involves an estimation of the required production inputs for certain output by the engineers. The engineers would calculate the raw

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• Fall '15
• Five years, KCC, Mutiso, D Limited

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