Analisis Biaya

Semester Gasal 2016 2017

Cost Behavior

Study Objectives
1.

Define and describe fixed, variable, and mixed costs.

2.

Explain the use of resources and activities and their

relationship to cost behavior.

3.

Separate mixed costs into their fixed and variable

components using the high-low method, the scatterplot
method, and the method of least squares.

4.

Evaluate the reliability of the cost formula.

5.

Explain how multiple regression can be used to assess

cost behavior.

6.

Define the learning curve, and discuss its impact on cost

behavior.

7.

Discuss the use of managerial judgment in determining

cost behavior.

Cost Behavior: Fixed Costs

Fixed costs are costs that in total are
constant within the relevant range as the
level of the activity driver varies.
Two production lines can process 10,000 computers
per year each. The workers on each line are
supervised by a production-line manager who is paid
$24,000 per year. For production up to 10,000 units,
only one supervisor is needed. When production is
between 10,001 and 20,000 units, two supervisors are
required.

Cost Behavior: Fixed Costs

Fixed costs are costs that in total are constant within the
relevant range as the level of the activity driver varies.

Two production lines can process 10,000 computers per year each.
The workers on each line are supervised by a production-line
manager who is paid $24,000 per year. For production up to
10,000 units, only one supervisor is needed. When production is
between 10,001 and 20,000 units, two supervisors are required.
Days Computer Inc.
Supervision

Computer
Processed

Unit Cost

$54,000

4,000

$13.50

54,000

8,000

6.75

54,000

10,000

5.40

108,000

12,000

9.00

108,000

16,000

6.75

108,000

20,000

5.40

Cost Behavior: Fixed Costs

Cost Behavior: Variable Costs

Variable costs are costs that in total vary in
direct proportion to changes in an activity
driver.

A CD-ROM disk drive is added to each computer at a cost of $30

per computer. The total cost of disk drives for each level of
production varies.
Days Computer Inc.
Total Cost of
CD-ROMs

Number of
Computers
Processed

Unit Cost of CDROMs

$120,000

4,000

$30.00

240,000

8,000

30.00

360,000

12,000

30.00

480,000

16,000

30.00

600,000

20,000

30.00

Cost Behavior: Variable Costs

Cost Behavior: Mixed Costs

Mixed costs are costs that have both a fixed
and a variable component.
Days Computer:
Ten sales representatives each earn an
annual salary of $30,000 plus a commission of
$50 per computer sold. 10,000 computers are
sold.
Total cost = Fixed cost + Total variable cost
Y = F + VX
For Days Computer, the selling cost is:
Y = $30,000 + $50X

Cost Behavior: Mixed Costs

Days Computer Inc.
Fixed Cost
of Selling

Variable
Cost of
Selling

Total Cost

Computers Selling Cost

Sold
per Unit

$300,000

$200,000

$500,000

300,000

400,000

700,000

8,000

87.50

300,000

600,000

900,000

12,000

75.00

300,000

800,000

16,000

68.75

20,000

65.00

300,000

1,000,000

1,100,000
1,300,000

4,000

$125.00

10

Cost Behavior: Mixed Costs

Resources, Activities and Cost Behavior

Flexible resources
Acquired as used and needed
Usually considered variable costs
Examples: materials, energy

Committed resources
Acquired in advance of usage
Usually considered fixed costs
Examples: buying or leasing buildings, contracts

with employees

Resources, Activities, and Cost

Behavior
Step cost behavior displays a constant
level of cost for a range of output and then
jumps to a higher level of cost at some point
Step-Variable costs
Narrow increments
Approximate as a strictly variable

assumption
Step-Fixed costs
Wide increments
Assigned to the fixed cost category

Resources, Activities, and Cost

Behavior
Step-Variable Cost

Resources, Activities, and Cost

Behavior
Step-Fixed Cost

Methods for Separating Mixed Costs

into Fixed and Variable Components

The High-Low Method

The Scatterplot Method
The Method of Least Squares

Methods for Separating Mixed Costs

into Fixed and Variable Components

Straight-line equation:
Y = F + VX
where
Y = Total activity cost
F = Fixed cost component
V = Variable cost per unit
X = Measure of activity output

High-Low Method

Step 1: Solve for variable cost (V)

V = Change in cost Change in activity

High-Low Method
Low Activity

High Activity

$7,500 - $2,000
Step1: V
$13.75
500 - 100

High-Low Method
Step 1: Solve for variable cost (V)
V = Change in cost Change in activity

$7,500 - $2,000
V
$13.75
500 - 100
Step 2: Using either the high cost or low cost, solve for
the total fixed costs F

Low cost

Y F V (X )
$2,000 F $13.75(100)
$625 F

High cost

Y F V(X )
$7,500 F $13.75(500)
$625 F

Scatterplot Method
Step 1: Plot the data points on a scattergraph

Scatterplot Method
Step 2: Choose the two data points most representative
of the data to describe the cost behavior line

Method of Least Squares

Regression Programs
The best-fitting line is the line with the

smallest sum of squared deviations

Regression analysis determines the linear
function with the minimum sum of
squared deviations
Utilize spreadsheet packages such as
Microsoft Excel to perform the
computation

Regression Analysis for the Method

of Least Squares
Spreadsheet Data for Anderson Company

Regression Analysis for the Method

of Least Squares

Regression Output for

Anderson Company

Regression Analysis
for the Method of Least Squares

The regression analysis gives rise to

the following equation for Andersons
material handling cost:

$854.50 + ($12.39 number of moves)

Reliability of Cost Formulas

Hypothesis test of parameters

The lower the P-value, the more likely that

the true parameter is significantly different

from 0
Traditional benchmarks of significance are
0.10, 0.05 or 0.01

Reliability of Cost Formulas

Goodness of fit

R2 is the coefficient of determination

Measures the percentage of change in the

dependent variable explained by changes in

the independent variable
The closer to 1.0, the better; no benchmark

Reliability of Cost Formulas

Confidence intervals

The standard error is used to determine the

range of possible values around the

predicted value:

Standard t-statistic Confidence

Error
Interval

Multiple Regression
Least-squares method is used to fit an
equation involving two or more explanatory
variables
Y = F + V1X1 + V2X2 etc.

where

X1 = first explanatory variable

X2 = second explanatory variable

Multiple Regression
Spreadsheet Data for Anderson Company
X1
X2

Multiple Regression Analysis

for the Method of Least Squares

Multiple Regression
Based on the multiple regression analysis,
the cost formula is written as:
Y = $507 + $7.84X1 + $0.11X2
In November the company expects to make
350 moves with a weight of 17,000 pounds.
The predicted cost of material handling is:

Y = $507 + $7.84(350) + $0.11(17,000)

= $507 + $2,744 + $1,870
= $5,121

Cumulative Average Time Learning

Curve with 80% Learning Rate
Cumulative
Number
of Units
(1)
1
2
3
4
5
6
7
8
16
32

Cumulative
Average Time
per Unit in Hours
(2)

Cumulative
Individual Units
Total Time:
Time for nth
Labor Hours Unit-Labor Hours
(3) = (1) (2)
(4)

100
80
(80% 100)
70.21
64
(80% 80)
59.57
56.17
53.45
51.20 (80% 64)
40.96
32.77

100
160
210.63
256
297.85
337.02
374.15
409.60
655.36
1,048.64

100
60
50.63
45.37
41.85
39.17
37.13
35.45
28.06

Graph of Cumulative Total Hours Required

and the Cumulative Average Time per Unit

Managerial Judgment
Managerial judgment is critically

important in determining cost behavior

and is by far the most widely used method
in practice
Advantage simplicity
Disadvantage poor judgment leads to

errors