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17 Cards in this Set

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cost prediction
The application of cost measures to expected future activity levels to forecast future costs
account analysis
Selecting a plausible cost driver and classifying each account as a variable cost or as a fixed cost
visual-fit method
A method in which the cost analyst visually fits a straight line through a plot of all the available data
engineering analysis
The systematic review of materials, supplies, labor, support services, and facilities needed for products and services; measuring cost behavior according to what costs should be, not by what costs have been.
high-low method
A simple method for measuring a linear-cost function from past cost data, focusing on the highest-activity and lowest-activity points and fitting a line through these two points
least-squares regression (regression analysis)
Measuring a cost function objectively by using statistics to fit a cost function to all the data
coefficient of determination (R²)
A measurement of how much of the fluctuation of a cost is explained by changes in the cost driver
Measurement of cost behavior
Understanding and quantifying how activities of an organization affect levels of costs
linear-cost behavior
Activity that can be graphed with a straight line because costs are assumed to be either fixed or variable
step costs
Costs that change abruptly at intervals of activity because the resources and their costs come in indivisible chunks
mixed costs
Costs that contain elements of both fixed- and variable-cost behavior
capacity costs
The fixed costs of being able to achieve a desired level of production or to provide a desired level of service while maintaining product or service attributes, such as quality
committed fixed costs
Costs arising from the possession of facilities, equipment, and a basic organization: large, indivisible chunks of cost that the organization is obligated to incur or usually would not consider avoiding.
discretionary fixed costs
Costs determined by management as part of the periodic planning process in order to meet the organization’s goals. They have no obvious relationship with levels of capacity or output activity.
cost measurement
Estimating or predicting costs as a function of appropriate cost drivers
cost function
An algebraic equation used by managers to describe the relationship between a cost and it’s cost driver (s).
activity analysis
The process of identifying appropriate cost drivers and their effects on the costs of making a product or providing a service