Describe the Five Steps That Comprise the Process of Estimating

question 12

Essay

Describe the five steps that comprise the process of estimating the cost of a particular activity.Illustrate the steps with a hypothetical example.

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Definitions:

Spending Variance

The variance between the real expenditure and the anticipated budget over a specific timeframe.

Other Expenses

Costs not directly related to the production of goods or services, such as administrative and marketing expenses.

Fixed Cost

Costs that do not change with the level of production or sales volume, remaining constant regardless of business activities.

Planning Budget

An initial budget created using the assumptions of a particular level of activity to guide a company's financial decisions.