Mgrl Acct From Chapter 5

Front 1

A method for analyzing cost behavior in which each account under consideration is classified as either variable or fixed based on the analyst's prior knowledge of how the cost in the account behaves.

Back 1

Account anaylsis

Front 2

A measure of whatever causes the incurrence of a variable cost.

Back 2

Activity base

Front 3

Those fixed costs that are difficult to adjust and that relate to investment in facilities, equipment, and basic organizational structure.

Back 3

Committed fixed costs

Front 4

An income statement format that is geared to cost behavior in that costs are separated into variable and fixed categories rather than being separated according to the functions of production, sales, and administration.

Back 4

Contribution approach

Front 5

The amount remaining from sales revenues after all variable expenses have been deducted

Back 5

Contribution margin

Front 6

The relative proportion of fixed, variable, and mixed costs found within an organization.

Back 6

Cost structure

Front 7

A relationship between cost and activity that is a curve rather than a straight line.

Back 7

Curvilinear costs

Front 8

A variable that responds to some causal factor; total cost is the dependent variable, as represented by the letter Y, in the equation Y=a+bx.

Back 8

Dependent variable

Front 9

Those fixed costs that arise from annual decisions by management to spend in certain fixed cost areas, such as advertising and research.

Back 9

Discretionary fixed costs

Front 10

A detailed anaylsis of cost behavior based on an industrial engineer's evaluation of the inputs that are required to carry out a particular activity and of the prices of those inputs.

Back 10

Engineering approach

Front 11

A method of separating a mixed cost into its fixed and variable elements by analyzing the change in cost between the high and low activity levels.

Back 11

High-low method

Front 12

A variable that acts as a causal factor; activity is the independent variable, as represented by the letter X, in the equation Y=a+bx.

Back 12

Independent variable

Front 13

A method of separating a mixed cost into its fixed and variable elements by fitting a regression line that minimizes the sum of the squared errors.

Back 13

Least-squares method

Front 14

Whenever cost behavior is a straight line and is reasonable approximation for the relation between cost and activity.

Back 14

Linear cost behavior

Front 15

A cost that contains both variable and fixed cost elements.

Back 15

Mixed cost

Front 16

An analytical method required in those situations where variations in a dependent variable are caused by more than one factor.

Back 16

Multiple regression

Front 17

A measure of goodness of fit in least-squares regression anaylsis. It is the percentage of the variation in the dependent variable that is explained by variation in the independent variable.

Back 17

R2

Front 18

The range of activity within which assumptions about variable and fixed cost behavior are valid.

Back 18

Relevant range

Front 19

The cost of a resource (such as a maintainence worker) that is obtainable only in large chunks and that increases and decreases only in response to fairly wide charges in the activity level.

Back 19

Step-variable cost