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Chapter 3 - Cost Behaviour
Cost Behaviour is the relationship between cost and the activity volume.
Variable Cost + Fixed Cost = Total Cost
1.Find Highest and Lowest point
2.Variable cost per unit > V= YH – YL / XH - XL
3.Fixed cost > F = Y-(V)(X) [Either use High or Low]
4.Y = F – (V)(x)
•Scatter plot Method
•Method of least Squares
.:. Estimate the cost function/equation/formula
Total Cost = Ttl Fixed Cost + (Variable Cost per unit)(Activity Volume)
Y = F + (v)(x)
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