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Behaviour
HM Chapter 3
26 March 2014
Topics Covered
No. Topic
1
Introduction
No Topic
.
7
Transfer Price
Cost Behaviour
Budgeting
Standard Costs
10
Segment
11
reporting &
Desentralization
Quality Cost
12
Cost-Volume-Profit
Analysis
Relevant Cost for
Decision Making
Lean System, target
costing & BSC
Corporate Social
Responsibility
Environmental Cost
Learning Objectives
The
Cost
Fixed
cost
Variab
le
cost
Mixed
Cost
biaya yg tetap
ketika
penggunaan
aktvitas
naik/turun
biaya berubah
langsung
secara
proporsional
terhadap
output
Terdiri atas
komponen
fixed &
variable
FIXED
FIXED COST:
COST: Definition
Definition
Fixed costs do not vary over the
relevant range.
Reddy Heaters: 1 cutting
machine costs $60,000 per year
& can produce up to 240,000, 3inch segments
VARIABLE
VARIABLE COST:
COST: Definition
Definition
Variable costs vary in direct
proportion to changes in output.
Reddy Heaters: 1 segment uses
0.1 kilowatts at cost of $2.00 per
kilowatt. Each segment costs
$.20.
MIXED
MIXED COST:
COST: Definition
Definition
Mixed costs have a variable and
a fixed component.
Reddy Heaters: sales people
earn a $10,000 salary + $0.50
commission on each heater sold.
COST BEHAVIOR
ACTIVITIES
Every
activity has a
10
CAPACITY:
CAPACITY: Definition
Definition
Capacity for an activity is the
amount
an activity
a
amount
of anofactivity
a company
company
perform.
can can
perform.
Practical capacity is the level at
which company can perform
efficiently.
11
12
FLEXIBLE RESOURCES
Are
direct materials
13
COMMITTED RESOURCES
Are
factory building
14
COMMITTED
COMMITTED RESOURCES:
RESOURCES:
Can
Can Be
Be
15
STEP
STEP COST:
COST: Definition
Definition
Step-costs exhibit a discontinuous
behavior pattern.
Step-costs are constant for a certain
range of output, then jump to another
level, remaining constant again over a
certain range of output.
16
Step cost
Relevant range
Example
Engineering
cost $50.000/year to
produce 2500 unit & 3 engineer hired
Capacity prod. Available = 3x2500 =
7500
If production only 6000 unit/year
total supply cost = $90.000
Fixed activity rate?
Variable activity rate?
Total cost?
EQUATIONS
Total Cost = Fixed Cost + Variable Cost
= Engineering Cost + Supply Cost
Fixed activity rate =
Variable activity rate =
19
Total
Fixed
MIXED COST
Methods for separating mixed
costs into fixed and variable
components
high-low
method,
scatterplot method, and
method of least squares.
LINEARITY ASSUMPTION
Variable
Variablecost
cost
assumes
assumesaalinear
linear
relationship
relationship
between
betweencost
costand
and
activity
activitydriver.
driver.
HIGH-LOW METHOD
Variable rate = Change in cost / Change in output
(High cost Low cost) / (High output Low output)
Fixed cost = Total cost for high (Low) point
{Variable rate x High (Low) output}
23
Month
Cost ($)
Time (hour)
January
1000
100
February
1250
200
March
2250
300
April
2500
400
May
3750
500
High-low Method
Keunggulan
Objektif
Mudah
Cepat
Kelemahan
SCATTERPLOT METHOD
Scatterplot
Scatterplotisisaa
method
methodof
of
determining
determiningthe
the
equation
equationof
ofaaline
lineby
by
plotting
plottingthe
thedata
dataon
on
aagraph.
graph.
26
Dengan
= $6,25
Fixed Cost = $2250 (6,25x 300)
= $375
TC = 375 + (6,25 X)
Scatterplot
Allows you to see the data BUT
It lacks any objective criterion
for choosing the best-fitting line
28
SCATTERPLOT ADVANTAGE
29
LEAST SQUARES
30
formulae
V = [XY XY / n]
[X2 (X)2 / n]
F = Y V X
n
n
R2 = V[XY - X Y / n]
[EY2 (Y)2 / n]
Month
Cost ($)
Time (hour)
January
1000
100
February
1250
200
March
2250
300
April
2500
400
May
3750
500
Regresi
SUMMARY
OUTPUT
Regression Statistics
0.9717512
Multiple R
64
0.9443005
R Square
18
Adjusted R
0.9257340
Square
24
299.30474
Standard Error
99
Observations
ANOVA
Regression
Residual
Significance
SS
MS
F
F
50.860465 0.00567523
4556250 4556250
12
1
89583.333
268750
33
Total
4825000
df
Coefficient
s
Intercept
125
Standard
Error
Upper
Lower
Upper
Lower 95%
95%
95.0%
95.0%
0.3981989 0.7171290 874.012762 1124.0127 874.01276 1124.0
313.91347
05
11
8
63
28
13
t Stat
P-value
34
COEFFICIENT OF
DETERMINATION (R2)
Percentage
of variability in
dependent variable explained
by independent variable
Range: 0 1
Higher is better
35
COEFFICIENT OF CORRELATION
Square
root of coefficient of
determination
Measures whether variables
move in same (+) or opposite (-)
directions
Range: -1 - +1
36
MULTIPLE
MULTIPLE REGRESSION:
REGRESSION:
Definition
Definition
37
Month
Jan
feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Machine
hour
1340
1298
1376
1405
1500
1432
1322
1416
1370
1580
1460
1455
Summe
r
0
0
0
0
1
1
1
1
1
0
0
0
Cost
1740
1636
1788
1770
2390
2304
2250
2284
2260
1991
1840
1867
SUMMARY OUTPUT
Regression Statistics
0.99568
Multiple R
9
0.99139
R Square
6
Adjusted R
0.98948
Square
4
27.5753
Standard Error
1
Observations
12
ANOVA
Regression
Residual
Total
df
Significa
nce F
SS
MS
F
788538. 394269.
2
4
2 518.504 5.08E-10
6843.57 760.397
9
8
6
11 795382
Total BiayaCoefficie
= $291,58
+
Standard+ (1,068 x MachineHour)
Lower
Upper
Lower
nts
Error
t Stat
P-value
95%
95%
95.0%
(501,88
x Summer)
291.579 148.277 1.96643 0.08080
627.006
Upper
95.0%
627.006
MANAGERIAL JUDGMENT
Is
simplicity
Disadvantage: judgment errors
40
SELESAI