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Cost Analysis Methods in Accounting

1. Three methods for determining fixed and variable costs are presented: least squares, high-low points, and scattergraph. Fixed costs are determined to be $345, $291, and $350 respectively under each method. 2. A correlation coefficient is calculated to measure the strength of the linear relationship between two variables. The r value is found to be 0.9598. 3. An equation is given to calculate the standard error which measures how far the actual data points deviate from the regression line. The standard error is calculated to be $54.75.

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Prilly Manembu
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56 views6 pages

Cost Analysis Methods in Accounting

1. Three methods for determining fixed and variable costs are presented: least squares, high-low points, and scattergraph. Fixed costs are determined to be $345, $291, and $350 respectively under each method. 2. A correlation coefficient is calculated to measure the strength of the linear relationship between two variables. The r value is found to be 0.9598. 3. An equation is given to calculate the standard error which measures how far the actual data points deviate from the regression line. The standard error is calculated to be $54.75.

Uploaded by

Prilly Manembu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Manembu, Putri Aprilia

Pararel A
1. Fixed cost
 Metode least square

Since y = a + bx , then:
$700 = a + ($.1015 × 3,500)
= $700 − $355
a = $345 fixed cost per month

 High and Low Points Method


Electricity Guest
Cost Days
High............................................................ $1,000 6,500
Low............................................................. 400 1,000
Difference .................................................. $ 600 5,500

Variable rate =600/5,500 = $.1091per guest day

Fixed cost = $1,000 − (6,500 × $.1091)


$1,000 − $709
$291
 Scattergraph Method

Fixed cost per month


determined $350 $.10 variable cost
=
by inspection....... $350 3,500 average guest days per guest day
Average cost ........... $700
Less fixed cost........ 350
Variable cost ........... $350
2.
Σ(x i − x )(y i − y ) Column 6 total
r = =
Σ(x i − x ) 2 Σ(y i − y )2 (Column 5 total) (Column 7 total)
3,450,000 3,450,000
r = =
(34,000,000)(380,000) 12,920,000,000,000
3,450,000 = .9598
3,594,440

r 2 = .9212
3.

s′ = Σ(y i − y′i)2 = Column 5 total = $29,975 = $2,997.5 = $54.75


n−2 12 − 2 10

4.
E4-5
(a) Materials ............................................................... 40,000
Accounts Payable....................................... 40,000
(b) Work in Process.....................................................33,000
Factory Overhead Control ......................................2,000
Materials ......................................................35,000
(c) Payroll ....................................................................40,000
Accrued Payroll ...........................................40,000
(d) Accrued Payroll .....................................................40,000
Cash............................................................ 40,000
(e) Work in Process.....................................................32,000
Factory Overhead control........................................8,000
Payroll .........................................................40,000
(f) Factory Overhead Control ........................................4,000
Cash...............................................................4,000

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