Cost Accounting (15th Edition)

Published by Prentice Hall
ISBN 10: 0133428702
ISBN 13: 978-0-13342-870-4

Chapter 10 - Determining How Costs Behave - Assignment Material - Questions - Page 407: 10-7

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.
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