ADM2341 Chapter 6 Cost Behaviour

Knowledge of how the account behaves cost estimates

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Unformatted text preview: n methods, and evaluation of production methods, and material, labour and overhead material, labour and overhead requirements. requirements. requirements. requirements. LO 2 6-31 The Scattergraph Method Plot the data points on a graph Plot the data points on a graph Plot Plot (total cost vs. activity). ((total cost vs. activity). (total total Maintenance Cost 1,000’s of Dollars Y 20 ** ** 10 0 * ** * ** 0 1 2 3 4 X Patient-days in 1,000’s LO 2 6-32 The Scattergraph Method Maintenance Cost 1,000’s of Dollars Draw a line through the data points with about an Draw a line through the data points with about an Draw equal numbers of points above and below the line. equal numbers of points above and below the line. equal equal Y 20 ** ** 10 0 * ** * ** 0 1 2 3 4 X Patient-days in 1,000’s LO 2 6-33 The Scattergraph Method Maintenance Cost 1,000’s of Dollars Use one data point to estimate the total level of activity Use one data point to estimate the total level of activity Use and the total cost. and the total cost. Y Total maintenance cost = $11,000 20 * ** * ** ** ** 10 Intercept = Fixed cost: $10,000 0 0 1 2 3 4 X Patient-days in 1,000’s Pati...
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This note was uploaded on 01/27/2014 for the course ADM 2341 taught by Professor Managerialaccounting during the Winter '07 term at University of Ottawa.

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