1
Q
What is the first step?
A
To look for the highest and lowest levels of activity
2
Q
What causes the cost to happen?
A
The activity
3
Q
What is the second step?
A
To work out the difference in the highest and lowest level of activity, and their corresponding cost
4
Q
What is the difference between the highest and lowest level of activity?
A
Variable cost
5
Q
How do you then work out the variable cost?
A
Divide the cost by the level of activity
6
Q
Once we have the value of the variable cost, what do we do?
A
Substitute the lower activity, cost and variable cost all into the equation of a line, y = mx + c. This gives us the fixed cost
FFMA
flashcards
Decks in class (47)
# Cards
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Week 1 - History of Accounting5
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Week 1 - Financial vs Management Accounting15
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Week 1 - What are Financial Statements9
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Week 2 - Assets, Liabilities and Equity11
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Week 2 - Definitions of Assets, Liabilities and Equity, and Classification8
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Week 2 - Income Statement9
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Week 2 - What are the Accounting Conventions?2
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Week 2 - The Accruals Concept3
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Week 2 - What Makes Up the Statement of Financial Position3
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Week 2 - What Makes Up the Statement of Profit or Loss7
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Week 3 - Double-Entry Book Keeping Principles1
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Week 3 - PEARLS8
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Week 4 - Revenue, Purchases and Cost of Sales3
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Week 4 - Accounting for Property, Plant and Equipment8
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Week 4 - Bank Loans, Shares and Retained Earnings8
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Week 5 - An Introduction to Management Accounting I8
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Week 5 - An Introduction to Management Accounting II13
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Week 5 - CIMA Ethics1
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Week 5 - Cost Concepts19
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Week 5 - More Cost Definitions16
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Week 5 - Decision Making3
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Week 6 - Cost Behaviour and Job-Order Costing I14
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Week 6 - Cost Behaviour and Job-Order Costing II9
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Week 6 - High Low Method6
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Week 6 - Cost Behaviour and Job-Order Costing III14
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Week 6 - Cost Behaviour and Job-Order Costing IV14
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Week 7 - Job Order Costing Accounting and Overhead Allocation and Apportionment I21
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Week 7 - Job Order Costing Accounting and Overhead Allocation and Apportionment II5
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Week 7 - Job Order Costing Accounting and Overhead Allocation and Apportionment V6
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Week 8 - Absorption and Variable/Marginal Costing I9
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Week 8 - Absorption and Variable Costing II12
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Week 8 - Absorption and Variable Costing III3
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Week 8 - Absorption and Variable Costing IV11
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Week 9 - Cost Volume Profit Analysis3
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Week 9 - Cost Volume Profit Analysis II0
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Week 9 - Cost Volume Profit Analysis III3
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Week 9 - Cost Volume Profit Analysis IV5
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Week 10 - Cost Volume Profit Analysis 2.110
