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17 Cards in this Set

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Account analysis
a method for analyizing cost behavior in which each account is classified as either variable or fixed based on the analyst's prior knoledge of how thecost in the accoutn hegaves
activity base
a measure of whatever causes the incurrence of a variable cost. For example, the total cost of C-ray film in a hospital will increase as the number of x-rays taken increases. There fore the nuber of x-rays i the activity base that explains the total cost of x-ray film
committed fixed costs
fixed costs that are difficlut to adjust because they relate to the investment in facilities, equipment, and the basic organizationsl structure of a company
contribution approach
an income statement format that is geared to cost behavior. costs are separated into variable and fixed categories rather than being separated according to th funcionts of production, sales and administraton
contribution margin
the amount remaining from sales revenues after all variable expenses have been deducted.
costs structure
the relative proportion of fixed, variable and mixed costs in an organization
curvilinear cost
a relation between cost and activity that is a curve rather than straight line
dependent variable
a varibal ethat respondst to some causual factor; total cost is th dependent variable as represented by the letter Y in th equation Y=a+bx
discretionary fixed costs
fixed costs that arise from annual decisions by management to spend in certain fixed cost areas, such as advertising and research
engineering approach
a detailed analyis of cost behavior baased on an industrial engineer's evaluation of the inputs that ar required to carry out a particlular activity and of the prices of tose inputs
high-low method
a method of separating a mixed cost into its fixed and variable elements by analysing the change in cost between the high and low levels of activity
independent variable
a varibal etat acts as acausea factor' activty is the independ varibale, as represented by the letter X in teh equaion Y=a+bX
Least-squares regression method
a method of sepparating a mixed cost into its fixed and variable elements by fitting a regression line that minimizes the sume of the squared errors
linear cost behavior
cost behavior is said to be linear when a strait line is a reeasonable approximation for th relations between cost and activity
mixed cost
a cost that contais both variable and fixed cost elements
relevant range
the range of activty within which assumptions about variable and fixed cost behavior are valid
step-variable cost
the cost of a resource that is obtainable only in large chunks and that increases and decreases only in response to fairly wide chanbes in activity (such as the cost of a maintnence worker)