Account analysis-high low method-cost estimation method, Managerial Accounting

Account analysis (Inspection of accounts) method:

This method requires that departmental managers and the accountant inspect each item of expenditure within the accounts for some output level and then classify each of these items as wholly fixed, wholly variable or mixed.

A single average unit cost figure is selected for the items categorized as variable whereas a single total cost for the period is used for the items categorized as fixed.

Mixed costs are decomposed into their variable and fixed components.

High low method (Two point method):

Under this method, records of costs in the previous period are reviewed and the costs of 2 periods are selected. These are the period with the highest level of outputs and the period with the lowest output. A line passing through these two points is then established and used in estimating costs.

Posted Date: 12/4/2012 7:40:07 AM | Location : United States







Related Discussions:- Account analysis-high low method-cost estimation method, Assignment Help, Ask Question on Account analysis-high low method-cost estimation method, Get Answer, Expert's Help, Account analysis-high low method-cost estimation method Discussions

Write discussion on Account analysis-high low method-cost estimation method
Your posts are moderated
Related Questions
Application of zero base budgeting In the following areas ZBB may be applied: 1) redundant schemes may be discontinued 2) identify the duplicate schemes and merge them in

Determine the Profitability ratios in relation to investment a) Return on capital employed/ return on investment b) Return on equity or return on equity share holders' funds

Cascade Water Company (CWC) currently has 30 000 shares of common stock outstanding, trading at a price of R42 per share.

M/s ABC's present credit terms are 1/10 net 30 that they are planning to change to 2/10 net 30.  The current average collection period is 20 days and the variable cost to sales rat

Project C would involve a current outlay of $50,000 on equipment and $15,000 on working capital. The investment in working capital would be increased to $21,000 at the end of the f

Creditors turnover ratio ( or payables turnover ratio) Meaning: this ratio establishes a relation ship between net credit purchases and average trade creditors. Objective

Correlation coefficient (r) Correlation coefficient measures the degree of association between two variables such as the cost and the activity level. r = nΣxy   -  Σx  Σy


The case of a fixed discount When evaluating inventory decisions when a fixed discount rate exists, the appropriate procedure is to compare the total costs of the EOQ with the

What is the Responsibility of operating budget when the operating budget of a firm is constructed in terms of responsibility areas it is called the responsibility budget shows