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OBJCHP05_06 - Describe two general methods of estimating...

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COST AND MANAGEMENT ACCOUNTING 1 UNIT 1 : (Text Chapter 5) Determining How Costs Behave LEARNING OUTCOMES : 1. Understand how fixed and variable costs behave and how to use them to predict costs 2. Define activity base, cost driver , curvilinear cost , and multiple regression ; distinguish between a true variable cost and and a step variable cost . (pp190- 191) 3. Understand the characteristics of a fixed cost and distinguish between committed fixed costs and discretionary fixed costs ; Give and example of each. Describe current trends in fixed costs including the treatment of labour costs (pp., 194-195) 4. Describe the characteristics of a mixed cost and relate it to the equation for a straight line.
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Unformatted text preview: Describe two general methods of estimating the fixed and variable components of a mixed cost ( Account Analysis method and Engineering Approach ) pp. 198-199 6. Calculate an estimate of the fixed and variable components of a mixed cost under: Scattergraph approach and the High-Low Method . Understand the basis for the Least Squares Regression method of estimating these components and apply in an /Excel question (Excel Assignment #1) . Compare the three methods and the limitation inherent in all three methods in estimating cost components. Demonstration and Assignment Questions: P5-14, E5-4, E5-1, E5-3, E5-5 (review purposes), E5-7, E5-8, P5-15, P5-16, P5-17. RF 01/06...
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