Three Popular Methods of Identifying Variable and Fixed Components of a Cost

question 99

Essay

Three popular methods of identifying variable and fixed components of a cost are the scattergraph method, the high-low method and regression analysis.Compare and contrast these three methods.

Grasp the essence of planning in setting objectives and determining actions to achieve them.

Identify the importance of engaging multiple stakeholders in the planning process to enhance implementation and results.

Understand the concept of gains from specialization and trade.

Understand how production possibilities frontiers reflect economic trade-offs and efficiency.

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Definitions:

Sales Commissions

A portion of the sale price paid to salespersons as a reward for their sales efforts, typically a percentage of the sales they generate.

Monthly Sales

The total revenue generated from the sale of goods or services by a company within a month.

Net Operating Income

The profit a company generates from its normal business operations, excluding extraordinary items and expenses like taxes and interest.

Break-even

The point at which total revenues equal total costs, resulting in no net profit or loss for a business.