MAHM8e Chapter03.Ab.az

8/16/2019 MAHM8e Chapter03.Ab.az

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PowerPointPowerPoint Presentation byPresentation by

Gail B. WrightGail B. WrightProfessor Emeritus of AccountingProfessor Emeritus of Accounting

Bryant UniversityBryant University

© Copyright !!" #homson $outh%Western& a part of #he

#homson Corporation. #homson& the $tar 'ogo& an(

$outh%Western are tra(emar)s use( herein un(er license.

MANAGEMENT

ACCOUNTING

8th EDITION

BY

HANSEN & MOWEN

* AC#+,+#- C$# BE/A,+0

STUDENT EDITION


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1. Define cost behavior for fixed, variable, &

mixed costs.

2. Explain the role of the resource usage modelin understanding cost behavior.

3. Separate mixed costs into their fixed &

variable components using the high-lo

method, scatterplot method, and method of

least s!uares.

LEARNING OBJECTIVES

"ontinued


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#. Evaluate the reliabilit$ of a cost e!uation.

%. Discuss the role of multiple regression in

assessing cost behavior.

. Describe the use of managerial 'udgment in

determining cost behavior.

LEARNING OBJECTIVES


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(f )edd$ *eaters produces

tice as man$ heaters as last$ear, ill production costs

double+

NO. Variable costs ill double if

production doubles but fixed

costs ill not change.

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1+2E3 C$#4 3efinition

ixed costs do not var$ over the

relevant range.)edd$ *eaters/ 1 cutting

machine costs 0, per $ear

& can produce up to 2#,, 3-inch segments

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,A0+AB'E C$#4 3efinition

ariable costs var$ in direct

proportion to changes in output.)edd$ *eaters/ 1 segment uses

.1 iloatts at cost of 02. per

iloatt. Each segment costs0.2.

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5+2E3 C$#4 3efinition

4ixed costs have a variable and

a fixed component.

)edd$ *eaters/ sales people

earn a 01, salar$ 5 0.%

commission on each heater sold.

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C$# BE/A,+0 AC#+,+#+E$

Ever$ activit$ has a

6ime hori7on for measurement

)esources to accomplish the tas

4aterials

abor

"apital

utput measures 8activit$ drivers9

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Materials

a!"r

Ca#ital


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CAPAC+#-4 3efinition

"apacit$ for an activit$ is the

amount of an activit$ a compan$can perform.

Practical capacit$ is the level at

hich compan$ can performefficiently.

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a$"%t "f a a'ti(it) a'"$#a) 'a #erf"r$.


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*o much capacit$ does a

compan$ need+ :hat happensif there is excess capacit$+

;eed for capacit$ depends on

level of performance re!uired.

Excess capacit$ affects cost behavior.

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1'E2+B'E 0E$U0CE$

!uantit$ demanded?????; E@"ESS "


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C55+##E3 0E$U0CE$


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C55+##E3 0E$U0CE$4Can Be

C"$$itted fixed '"sts, such as

a building or e!uipment bought,leased or

C"$$itted dis'reti"ar)

'"sts, such as implicit contractsith emplo$ees.

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$#EP C$#4 3efinition

Step-costs exhibit a discontinuous

behavior pattern.

Step-costs are constant for a certain

range of output, then 'ump to another

level, remaining constant again over a

certain range of output.

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C/A6GE 03E0 E7UA#+6$

CHANGE O*DE* > +ixed C"st 5 ,aria!le C"st

> Engineering "ost 5 Suppl$ "ost

+ixed a'ti(it) rate >6otal committed cost

6otal capacit$ available

,aria!le a'ti(it) rate >

6otal cost of flexible resources

"apacit$ used

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'+6EA0+#- A$$U5P#+6ariable cost

assumes a liear

relati"shi#

beteen cost and

activit$ driver.

E2/+B+#E2/+B+# *%"*%"

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3


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/+G/%'W E7UA#+6$

,aria!le rate > "hange in cost "hange in output

8*igh cost F o cost9 8*igh output F o output9

+ixed '"st >

6otal cost for high 8"-9 point

Gariable rate x *igh 8"-9 outputH

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3


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$CA##E0P'# 5E#/3

E2/+B+#E2/+B+# *%88*%88

Scatterplot is amethod of

determining the

e!uation of a line b$

plotting the data on

a graph.

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:hat are the advantages,

disadvantages of scatterplot+

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Scatterplot


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$CA##E0P'# A3,A6#AGE

"an $ou see h$

the high-lo

method doesnKt

ala$s provide the

best cost e!uation+

E2/+B+#E2/+B+# *%8*%8

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3


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'EA$# $7UA0E$

E2/+B+#E2/+B+# *%8**%8*

3


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#


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CE11+C+E6# 1

3E#E05+6A#+6 90:

Aercentage of variabilit$ in dependentvariable explained b$ independent

variable)ange/ F 1

*igher is better

Aercentage of variabilit$ in dependentvariable explained b$ independent

variable)ange/ F 1

*igher is better

#

#


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CE11+C+E6# 1 C00E'A#+6

S!uare root of coefficient of

determination

4easures hether variables move in

same 859 or opposite 8-9 directions

)ange/ -1 - 51

S!uare root of coefficient of

determination

4easures hether variables move in

same 859 or opposite 8-9 directions

)ange/ -1 - 51

#

%


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5U'#+P'E 0EG0E$$+64 3efinition

4ultiple regression uses 2 or more

independent variables 8variablecosts9 in addition to the $-

intercept 8fixed cost9 to explain

the dependent variable.

%


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5A6AGE0+A' ;U3G5E6#

(s a method of cost assignment used to

Determine fixed, variable cost

Jses managerial experience

Jses past observation of cost relationships

6o refine statistical estimation results


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THE END

CHA0TE* 1

MAHM8e Chapter03.Ab.az

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