The following information has been extracted from the cost accounting information system database for Casio Ltd. The company manufactures Casio Calculators. The cost accountant wants to carry out some analysis on the following 5 costs to ascertain the behavior of the costs. The cost accountant extracted the values of the 5 costs at three activity levels of 24,000 units,30,000 units and 36,000 units. (Note: The cost accountant intends to use the units produced as the activity level in the cost analysis. Required: i) Using the information provided in the above table identify and explain how you classify each of the above costs according to behavior of cost approach. ii) From the above classification in (i) calculate the fixed cost for any mixed cost that is identified from the above 5 costs using the high-low cost estimation method.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
The following information has been extracted from the cost
The cost accountant extracted the values of the 5 costs at three activity levels of 24,000 units,30,000 units and 36,000 units. (Note: The cost accountant intends to use the units produced as the activity level in the cost analysis.
Required:
i) Using the information provided in the above table identify and explain how you classify each of the above costs according to behavior of cost approach.
ii) From the above classification in (i) calculate the fixed cost for any mixed cost that is
identified from the above 5 costs using the high-low cost estimation method.
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