# Chap 5 Terms - Flashcards

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 Class: ACTG 212 - Fundamentals of Managerial Accounting Subject: Accounting University: Radford University Term: Fall 2009
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 Cost structure The relative proportion of fixed, variable, and mixed costs in an organization. Dependent Variable (DV) Variable that responds to casual factor; total cost in the DV, as represented by the letter Y, n the equation Y=a+bX Discretionary Fixed Costs Fixed costs that arise from annual decisions by management to spend on certain fixed cost items, such as advertising and research. Engineering Approach A detailed analysis of cost behavior based on an industrial engineer's evaluation of the inputs that are required to carry out a particular activity and of the prices of those inputs.
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 High-low Method Method of separating a mixed cost into fixed and variable elements by analyzing the change in cost between the high and low levels of activity. Independent Variable (IV) A variable that acts as a casual factor; activity is the IV as represented by the letter X, in the equation Y=a+bX. Linear Cost Behavior Cost behavior is said to be linear when a straight line is reasonable approximation for the relation between cost and activity. Mixed Cost A cost that contains both variable and fixed cost elements.
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 Relevant Range Range of activity within which assumptions about variable and fixed cost behavior are reasonably valid. Step-variable cost The cost of a resource that is obtainable only in large chunks and that increases and decreases only in responce to fairly wide changes in activities.
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Cost structureThe relative proportion of fixed, variable, and mixed costs in an organization.
Dependent Variable (DV)Variable that responds to casual factor; total cost in the DV, as represented by the letter Y, n the equation Y=a+bX
Discretionary Fixed CostsFixed costs that arise from annual decisions by management to spend on certain fixed cost items, such as advertising and research.
Engineering ApproachA detailed analysis of cost behavior based on an industrial engineer's evaluation of the inputs that are required to carry out a particular activity and of the prices of those inputs.
High-low MethodMethod of separating a mixed cost into fixed and variable elements by analyzing the change in cost between the high and low levels of activity.
Independent Variable (IV)A variable that acts as a casual factor; activity is the IV as represented by the letter X, in the equation Y=a+bX.
Linear Cost BehaviorCost behavior is said to be linear when a straight line is reasonable approximation for the relation between cost and activity.
Mixed CostA cost that contains both variable and fixed cost elements.
Relevant RangeRange of activity within which assumptions about variable and fixed cost behavior are reasonably valid.
Step-variable costThe cost of a resource that is obtainable only in large chunks and that increases and decreases only in responce to fairly wide changes in activities.