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Cost Accounting--Ch. 10

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Account Analysis Method
approach to cost function estimation that classifies various cost accounts as variable, fixed, or mixed with respect to the identified level of activity; typically qualitative rather than quantitative analysis is used when making these cost-classification decisions
Coefficient of Determination
measures the percentage of variation in a dependent variable explained by one or more independent variables
Conference Method
approach to cost function estimation on the basis of analysis and opinions about costs and their drivers gathered from various departments of a company (purchasing, proces engineering, manufacturing, employee relations, and so on.
Constant
the compnent of total cost that, within the relevant range, does not vary with changes in the level of the activity
Cost Estimation
the attempt to measure a past relationship based on data from past costs and the related level of an activity
Cost Function
mathematical description of how a cost changes in the level of an activity relating to that cost
Cost Predictions
forecasts about future costs
Cumulative Average-time Learning Model
learning curve model in which the cumulative average time per unit declines by a constant percentage each time the cumulative quantity of units produced doubles
Dependent Variable
the cost to be predicted
Experience Curve
function that measures the decline in cost per unit in various business functions of the value chain, such as manufacturing, marketing, distribution, and so on, as the amount of these activities increases
High-Low Method
method used to estimate a cost function that uses only the highest and lowest observed values of the cost driver within the relevant range and their respective costs
Incremental Unit-time Learning Model
learning curve model in which the incremental time needed to produce the last unit declines by a constant percentage each time the cumulative quantity of units produced doubles
Independent Variable
level of activity or cost driver used to predict the dependent variable (costs) in a cost estimation or prediction model
Industrial Engineering Method
approach to cost function estimation that analyzes the relationship between inputs and outputs in physical terms
Intercept
another term for constant
Learning Curve
function that measures how labor-hours per unit decline as units of production increase because workers are learning and becoming better at their jobs
Linear Cost Function
cost function in which the graph of total costs versus the level of a single activity related to that cost is a straight line within the relevant range
Mixed Cost
a cost that has both fixed and variable elements
Multicollinearity
exists when two or more independent variables in a multiple regression model are highly correlated with each other
Multiple Regression
regression model that estimates the relationship between the dependent variable and two or more independent variables
Nonlinear Cost Function
cost function in which the graph of total costs based on the level of a single activity is not a straight line within the relevant range
Regression Analysis
statistical method that measures the average amount of change in the dependent variable associated with a unit change in one or more independent variables
Residual Term
the vertical difference or distance between actual cost and estimated cost for each observation in a regression model
Semivariable Cost
another term for mixed cost
Simple Regression
regression model that estimates the relationship between the dependent variable and one independent variable
Slope Coefficient
coefficient term in a cost estimation model that indicates the amount by which total cost changes when a one-unit change occurs in the level of acitivity within the relevant range
Specification Analysis
testing of the asumptions of regression analysis
Standard Error of the Estimated Coefficient
regression statistic tht indicates how much the estimated value of the coefficient is likely to be affected by random factors
Work-Measurement Method
another term for industrial engineering method