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ESTIMATION
QUIZ: Group
1. What is the cost object?
2. What are the direct cost?
3. What are the indirect cost?
Cost Terms
Cost Driver:
Manufacturing
Cost:
Direct and
Indirect Costs:
Controllable and
Uncontrollable
Costs:
Product/Period
Cost:
Economic Terms
Opportunity
Cost:
Sunk Cost:
Differential
and
Incremental
Cost:
Marginal
Cost:
Average
Cost per
Unit:
Cost Classifications
cost tracing
Direct
Costs
Cost
Object
Indirect
Costs
cost allocation
Examples: a Candy
Manufacturer
Cost
Behavior
Fixed Costs: costs that
remain constant regardless of
the quantity of product
produced.
Output
Output
Total Contribution
Total Costs
If costs are linear, then total costs graphically
look like this.
Cost Driver
$
Cost Driver
Total Costs
If costs are linear, then total costs graphically
look like this.
Cost Driver
$
Cost Driver
Cost Driver
$/unit
Cost Driver
Cost Driver
$/unit
Cost Driver
Volume
Solution:
Step 1Find the high and low points: The high number of machine hours is in March, and the low number of
machine hours is in June. (Hint: Did you notice that the high cost of $4,200 was for August? Yet August is not the high point because its
number of machine hours is not the highest activity level. Remember, the high point is associated with the highest activity
level; the low point is associated with the lowest activity level.)
Scattergraph Method
The scattergraph method is a way to see the cost
relationship by plotting the data points on a
graph.
The first step in applying the scattergraph
method is to plot the data points so that the
relationship can be seen.
Slope
^
Yi = a + b X i
Dependent
(response) variable
Independent
(explanatory) variable
i a bx i
Y
n
x i y i nx y
Slope:
b i n
x i n x
i
Y-Intercept:
a y bx
Comparison of Methods
Knowing how costs change in relation
to changes in output is essential to
planning, controlling, and decision
making.
Each of the methods for separating
mixed costs into fixed and variable
components help managers
understand cost behavior and
consequently make good business
decisions.
Januari
Februari
Maret
April
Mei
Juni
Juli
Agustus
September
Oktober
November
Desember
(Y)
6.900.000
7.500.000
6.400.000
7.200.000
8.100.000
8.800.000
6.800.000
7.090.000
6.500.000
6.900.000
8.500.000
6.700.000
Number of
activity
(X)
46
61
40
55
63
70
52
46
42
47
65
43
ANSWER
- Var rate= (Rp 8.800.000-6.400.000)/
(70-40)
= Rp. 3.200.000
Cost formula =
Total maintenance cost = Rp.
3.200.000 + (Rp 80.000 X activity)