Cost Behavior and Estimation

Start with cost behavior

Begin with the slides on cost behavior for an introduction to how costs change with output or activity. They cover fixed, variable and semi-variable costs. The mind map on fixed and variable costs offers another way to look at the distinction: fixed costs stay the same regardless of how many products a business makes or sells, while variable costs change with the number of products.

After that, use the flashcards on cost concepts and behavior to review terms such as opportunity cost, direct costs, fixed costs and variable costs. The deck also includes terms for margins, giving you a wider set of concepts to recognize as you study.

Move on to estimation

The High-Low Method mind map shows how mixed costs can be split into fixed and variable parts. It sets out the relationship between total cost, fixed cost and variable cost, and shows how high and low activity points are used to find variable cost per activity.

For more terminology, look at the flashcards on cost estimation methods. They include account analysis, the engineering approach, the high-low method and least-squares regression. The slides on managerial accounting also cover account classification, including the examination of ledger accounts to classify costs.

Combine maps and quizzes

Once you have studied a map, try a quiz that asks about the same ideas. The cost behavior practice quiz asks about variable costs and changes in activity. Another quiz asks about the conference method and how accounts are classified as variable, fixed or mixed. Return to the relevant map or slides when you want to check a concept.

Use the topic within the unit

Cost Behavior and Estimation is one section of Cost Concepts and Classification in Accounting and auditing. The resources here bring together cost behavior, classification and estimation, so you can move between definitions, visual summaries and questions while studying this section. Choose a resource that fits what you want to practice next.