Hector R. Rios Delgado
MGM 5500 – Managerial Accounting
Discussion Board 2
1. What are the four methods commonly used to identify the fixed and variable elements of a
mixed cost?
The four methods commonly used to identify the fixed and variable elements of a mixed cost are:
1.
Engineering Approach
is a method of separating mixed cost into its fixed and variable
components using experts that are familiar with the technical aspects of the activity and
associated cost.
2.
Scatter Graphing
is a method of separating mixed cost into its fixed and variable
components by plotting historical activity and cost data to determine how the cost relates
to various levels of activity.
3.
The High-Low Method
is a method of separating a mixed cost into its fixed and variable
components using the mathematical differences between the highest and lowest levels of
activity and cost.
4.
Regression Analysis
is a method of separating a mixed cost into its fixed and variable
components using fairly complex mathematical formulas.