Cost Behaviour

Managerial Accounting
Khusnul Prasetyo
 Learning Objectives

1. Define cost behavior for fixed, variable, and

mixed costs.
2. Separate mixed costs into their fixed and
variable components using the high-low
method, the scatterplot method, and the
method of least squares.
Why do managers need to know “cost behaviour”?
• Mengapa kita harus tahu perilaku
ayah dan bunda kita?
• Mengapa kita harus tahu perilaku
gebetan/pacar/pasangan?
• Mengapa manajer harus tahu
perilaku biaya?
Tak tahu atau tak mau tahu:
Meminta uang saat ayah kita sedang capek
lembur di kantor, atau saat mereka sakit!
MENGETAHUI PERILAKU ORANG TUA
Supaya kita bisa mengelola (me-manage)
hubungan kita dengan orang tua!
Tak tahu atau tak mau tahu:
Tidak (mau) tahu tempat nongkrong pacar resmi dan
mengajak gebetan baru ke mal tertentu (yang sering
jadi tempat nongkrong pacar resmi)
MENGETAHUI PERILAKU PASANGAN
Supaya kita bisa mengelola (me-manage)
hubungan kita dengan pasangan!
MENGETAHUI PERILAKU BIAYA
Supaya manager bisa me-manage
(merencanakan, mengendalikan, dan
membuat keputusan) dengan baik berkaitan
dengan biaya!
Classifying Costs
3 Similar Cost Classification
By Behavior
• Fixed
• Variable
By Traceability
• Direct
• Indirect
By Function
• Product
• Period
 Fixed Costs – Within Relevant Range
• Sewa gudang
• Sewa peralatan
• Sewa mesin:

Cutting machines are leased

for $60,000 per year and have
the capacity to produce up to
240,000 units a year.
Total Fixed Cost Graph
$120,000
$100,000
$80,000 Fixed Costs
Total Costs
F = $60,000
$60,000
$40,000
$20,000
0 60 120 180 240
Units Produced (000)

Lease of Number Units Cost

Machines of Units
$60,000 0 N/A
60,000 60,000 $1.00
60,000 120,000 0.50
60,000 180,000 0.33
60,000 240,000 0.25
Unit Fixed Cost Graph
$1.00

Fixed Costs
Cost per Unit
$0.50

$0.33

$0.25
0 60 120 180 240
Units Produced (000)

Lease of Number Units Cost

Machines of Units
$60,000 0 N/A
60,000 60,000 $1.00
60,000 120,000 0.50
60,000 180,000 0.33
60,000 240,000 0.25
 Variable Cost Within Relevant Range

• Biaya bahan baku

• Biaya tenaga kerja langsung
• Biaya listrik perunit produk:

As the cutting machines cut each unit,

they use 0.1 kilowatt-hour at $2.00 per
kilowatt hour. Thus, the cost of each
unit is $0.20 ($2 x 0.1).
Total Variable Cost Graph

$48,000
Yv = .20x
$36,000
Variable Cost
Total Costs
$24,000
$12,000
0 60 120 180 240
Units Produced (000)

Cost of Number Units Cost

Power of Units
$ 0 0 $ 0
12,000 60,000 0.20
24,000 120,000 0.20
36,000 180,000 0.20
48,000 240,000 0.20
Unit Variable Cost Graph

$0.40
$0.30

Cost per Unit

$0.20 Variable Cost
$0.10
0
60 120 180 240
Units Produced (000)

Cost of Number Units Cost

Power of Units
$ 0 0 $ 0
12,000 60,000 0.20
24,000 120,000 0.20
36,000 180,000 0.20
48,000 240,000 0.20
Cost Classifications for
Predicting Cost Behavior
Behavior of Cost (within the relevant range)
Cost In Total Per Unit

Variable Total variable cost changes Variable cost per unit remains
as activity level changes. the same over wide ranges
of activity.
Fixed Total fixed cost remains Fixed cost per unit goes
the same even when the down as activity level goes up.
activity level changes.
 Fixed and Variable Costing
Outside Relevant Range
• Fixed cost dalam jangka panjang. Bayangkan sewa mesin
dalam jangka panjang, apakah jumlah mesin yang disewa
akan sama?
• Variable cost dalam jangka panjang. Apakah bahan baku
yang dibeli dalam jangka panjang akan sama?
Dalam jangka panjang semua biaya bersifat variabel
(sewa mesin pertahun bisa bertambah dan berkurang karena
ekspansi atau downsizing; biaya bahan baku perunit bisa
bertambah dan berkurang)
• mixed
A
Mayoritas
Biaya cost
gaji
biaya
pegawai
is a cost
•memiliki
thatBiaya
has listrik
both
perilaku
a fixed
and(meteran
MIXED
a variable
atau lama)
•SEMIVARIABEL
component.
Biaya overhead
 Mixed Cost Behavior
$130,000
$110,000
$90,000

Total Costs
$70,000
$50,000
$30,000
0 40 80 120 160 180 200
Units Sold (000)

Variable Fixed Total Selling Cost

Inserts Cost of Cost of Selling Cost per Unit
Sold Selling Selling
40,000 $ 20,000 $30,000 $ 50,000 $1.25
80,000 40,000 30,000 70,000 0.86
120,000 60,000 30,000 90,000 0.75
160,000 80,000 30,000 110,000 0.69
200,000 100,000 30,000 130,000 0.65
Methods for Separating Mixed Costs
The High-Low Method
The Scatterplot Method
The Method of Least Squares

Variable
Component
Fixed
Component
 The linearity assumption
assumes that variable costs
increase in direct proportion to
the number of units produced
(or activity units used).
 Methods for Separating Mixed Costs
Y = a + bx
TC = TFC + VC . Q

Total Cost Total Fixed Cost Variable Cost Number of Units

per Unit
(Y2 – Y1) (Cost2 –Cost1)
VC = VC =
(X2 – X1) (Q2 – Q1)

TFC = Substitusikan saja!

 The High-Low Method

Month Setup Costs Setup Hours

January $1,000 200
February 1,250 100
March 2,250 300
April 2,500 400
May 3,750 500

Step 1: Solve for variable cost perunit (VC)

 The High-Low Method

Month Setup Costs Setup Hours

January $1,000 200
February 1,250 200
March 2,250 300
April 2,500 400
May 3,750 500

(Cost2 –Cost1)
VC =
(Q2 – Q1)
 The High-Low Method

Month Setup Costs Setup Hours

January $1,000 100
February 1,250 200
March 2,250 300
April 2,500 400
May 3,750 500

High Cost – Low Cost

( $3,750 – Cost1)
b=
b= High Units – Low Units
( 500 – Q1)
 The High-Low Method

Month Setup Costs Setup Hours

January $1,000 100
February 1,250 200
March 2,250 300
April 2,500 400
May 3,750 500

$3,750 – Low Cost

($3,750 – $1,000)
b=
b= 500 – Low Units
(500 – 100)
 The High-Low Method
( $3,750 – $1,000)
b=
( 500 – 100)

b = $6.875

Step 2: Using either the high cost or low cost,

solve for the total fixed cost (a).
 The High-Low Method

TC = TFC + VC . Q High End

$3,750 = TFC + $6.875(500)
$312.50 = TFC
Y = TFC + VC . Q Low End
$1,000 = TFC + $6.875(100)
$312.50 = TFC
The cost formula using the high-low method is:
Total cost = $312.50 + ($6.875 x Setup hours)
 High Low Method

Total Cost
(TC)

* *
*

*
*
*

0 Output Quantity (Q)

 Scatterplot

Total Cost
(TC)

* *
*

*
*
*

0 Output Quantity (Q)

 Method of Least Square

Total Cost
(TC)

* *
*

*
*
*

0 Output Quantity (Q)

 The Method of Least Squares
Month Setup Costs Setup Hours
Jan 1,000 100
Feb 1,250 200
Mar 2,250 300
Apr 2,500 400
May 3,750 500

Spreadsheet Data for Larson Company

The Method of Least Squares
Regression Output:
Constant 125
Std. Err of Y Est 299.304749934466
R Squared 0.944300518134715
No. of Observation 5
Degrees of Freedom 3
X Coefficient(s) 6.75
Std. Err of Coef. 0.9464847243

Regression Output for Larson

Company
 The Method of Least Squares

The results give rise to the following equation:

Setup costs = $125 + ($6.75 x Setup hours)
R2 = .944, or 94.4 percent of the variation in
setup costs is explained by the number of setup
hours variable.