Answer
The account analysis method estimates cost functions by sorting cost accounts in the ledger as variable, fixed, or mixed based on the level of activity. It's a qualitative approach where managers use their judgment to classify costs. This method doesn't rely on extensive data analysis but rather the expertise of the decision-makers.
Work Step by Step
The account analysis method estimates cost functions by sorting cost accounts in the ledger as variable, fixed, or mixed based on the level of activity. It's a qualitative approach where managers use their judgment to classify costs. This method doesn't rely on extensive data analysis but rather the expertise of the decision-makers.