COST BEHAVIOR:

ANALYSIS AND USE

Created by Gamueda, Soriano, & Togle

SBAC-1C
Definition
Cost behavior is the resulting
change in the behavior of cost or
expenses of a business due to a
change in the business process.
 Importance of
Understanding Cost
Behavior

Cost Analysis Planning Control

 01 Determining the selling
Cost price of a product

Analysis 02 Meeting competition

03 Bidding on contracts

04 Analyzing profitability
Components 01 Strategic Planning
of Planning
02 Tactical Planning

03 Operations Planning
 Types of Cost
Behavior Patterns
Fixed Cost Variable Cost

Mixed Cost Step Cost

 Fixed Cost Variable Cost

It is where the total It is the type of cost

cost stays the same where the total cost
irrespective of the changes according
number of products to the units of a
produced or sold. product sold or
manufactured.
 Mixed Cost Step Cost

It is the type of cost It is the type of cost

that comprises both where the fixed cost
fixed and variable costs. changes at a
particular point in the
production process.
Cost Estimation
It is a concept which explains the methods
adopted, the reasons and end result of
evaluation of the cost of a project or
program, in order to take decision regarding
its feasibility and future potential.
Methods of Cost
Estimation
Least Square Regression

High-Low Method

Statistical Modelling
 Least Square High-Low
Regression Method

It is used to find the best It shows you the

fit line for variable and highest and lowest
fixed costs. level of cost that you
may incur.
 Statistical Modelling

It involves estimating several

economic factors that may lead
to a change in cost estimation.
References
Ghosal, S. (n.d.). Cost Behavior (A. K. Srivastav, Ed.) [Review of Cost Behavior].
Wall Street Mojo. Retrieved January 26, 2024, from
https://www.wallstreetmojo.com/cost-behavior/?
fbclid=IwAR1D8h10vMbtc8Rxmho7oIrCUyU5KlPIlwjJesrVYvnSHaxFS0_0CPtCr3M

Sinha, S. (n.d.). Cost Estimate (A. K. Srivastav, Ed.) [Review of Cost Estimate].
Wall Street Mojo. Retrieved January 26, 2024, from
https://www.wallstreetmojo.com/cost-estimate/?
fbclid=IwAR0ry9TQMu5Vifg_laRZJYQZ33v5hNDpnMqj-8-
S6LCNiKwOEoRw4KSvpRo

De Leon, N., De Leon, E., & De Leon, G. (n.d.). Cost Accounting and Control (2022
Edition, pp. 6–9, 26–31) [Review of Cost Accounting and Control].
 Thank You
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