Cost Behavior:

Analysis and Use

 Pengklasifikasian biaya
berdasar perilaku biaya:
1. Biaya Tetap (Fixed cost)
 biaya yang tidak berubah secara total dalam
hubungan dengan beberapa aktivitas atau
output yang dipilih
2. Biaya Variabel (Variable cost)
 biaya yang berubah secara total dalam
hubungan dengan beberapa aktivitas atau
output yang dipilih
3. Biaya Semivariabel (Semivariable cost)
 biaya yang memiliki baik komponen tetap dan
variabel

McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2003

 The Activity Base

Units Machine
produced hours
A measure of the
event that causes
the incurrence of a
variable cost – a
cost driver
Miles Labor
driven hours

McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2003

 True Variable Cost Example

Your total long

distance telephone bill
is based on how many
minutes you talk.
Total Long Distance
Telephone Bill

Minutes Talked
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 Variable Cost Per Unit Example

The cost per minute talked

is constant. For example,
10 cents per minute.

Telephone Charge
Per Minute

Minutes Talked
McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2003
 Exh.
5-5

Total Fixed Cost Example

Your monthly basic

telephone bill is
probably fixed and
does not change when
you make more local
Monthly Basic
Telephone Bill

calls.

Number of Local Calls

McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2003
 Exh.
5-5

Fixed Cost Per Unit Example

The fixed cost per local

call decreases as
more local calls are

Monthly Basic Telephone

made.

Bill per Local Call

Number of Local Calls
McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2003
 Cost Behavior
Examples of normally variable costs
Merchandisers Service Organizations
Cost of Goods Sold Supplies and travel

Manufacturers Merchandisers and

Direct Material, Direct Manufacturers
Labor, and Variable Sales commissions and
Manufacturing Overhead shipping costs

Examples of normally fixed costs

Merchandisers, manufacturers, and
service organizations
Real estate taxes, Insurance, Sales salaries
Depreciation, Advertising
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 Types of Fixed Costs

Committed Discretionary
Long-term, cannot be May be altered in the
reduced in the short short-term by current
term. managerial decisions

Examples Examples
Depreciation on Advertising and
Buildings and Research and
Equipment Development
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 Types of Variabel Costs

Enginereed
biaya yang memiliki hubungan fisik
tertentu dengan ukuran kegiatan
tertentu
Discretionary
biaya yang masukan dan keluarannya memiliki
hubungan yang erat namun tidak nyata
(bersifat artifi sial).
Jika keluaran berubah maka masukan akan
berubah sebanding dengan perubahan keluaran
tersebut. Namun jika masukan berubah,
keluaran belum tentu berubah dengan adanya
perubahan masukan tersebut

Examples Examples
Raw material Advertising and
Research and
Development
McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2003
 Cost Behavior

Fixed costs are usually characterized by:

a. Unit costs that remain constant.

b. Total costs that increase as activity
decreases.
c. Total costs that increase as activity
increases.
d. Total costs that remain constant.

McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2003

 Cost Behavior

Fixed costs are usually characterized by:

a. Unit costs that remain constant.

b. Total costs that increase as activity
decreases.
c. Total costs that increase as activity
increases.
d. Total costs that remain constant.

McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2003

 Cost Behavior

Variable costs are usually characterized by:

a. Unit costs that decrease as activity
increases.
b. Total costs that increase as activity
decreases.
c. Total costs that increase as activity
increases.
d. Total costs that remain constant.

McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2003

 Cost Behavior

Variable costs are usually characterized

by:
a. Unit costs that decrease as activity
increases.
b. Total costs that increase as activity
decreases.
c. Total costs that increase as activity
increases.
d. Total costs that remain constant.
McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2003
 Mixed Costs

A mixed cost has both fixed and variable

components. Consider the example of utility cost.

Y
Total Utility Cost

Variable
Cost per KW

X Fixed Monthly
Activity (Kilowatt Utility Charge
Hours)
McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2003
 Tujuan pemisahan biaya
semivariabel:

Perhitungan tarif biaya overhead dan analisis

varian
Persiapan anggaran fleksible dan analisis varians
Perhitungan biaya langsung dan analisis varians
Analisis titik impas dan analisis biaya-volume
laba
Analisis biaya differensial dan komparatif
Maksimisasi laba dan minimisasi biaya jangka
pendek
Analisis anggaran modal
Analsis profitabilitas pemsaran berdasarkan
daerah, produk dan pelanggan. © The McGraw-Hill Companies, Inc., 2003
McGraw-Hill/Irwin
 Pola Perilaku Biaya

1. Pertama, harus dipilih biaya yang akan diselidiki pola perilakunya.

Biaya ini merupakan variabel tidak bebas (dependent variable) dan
biasanya dinyatakan dengan simbol y.

2. Kedua, harus dipilih variabel bebas (independent variable), yaitu sesuatu

yang menyebabkan biaya tersebut berfluktuasi. Secara matematis, fungsi
tersebut dinyatakan, y = f(x).

3. Ketiga, harus dipilih kisaran kegiatan yang relevan (relevant range of

activity), dimana hubungan antara variabel bebas dan tidak bebas yang
dinyatakan dalam fungsi biaya tersebut berlaku.

McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2003

 Methods for Separating Mixed Costs

Y = a + bx

Total Cost
Total Fixed
Variable
Number of
Cost CostUnits
per
Unit

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 Mixed Costs
The total mixed cost line can be expressed
as an equation: Y = a + bX

Where: Y = the total mixed cost

a = the total fixed cost (the
vertical intercept of the line)
Y
Total Utility Cost

b = the variable cost per unit of

activity (the slope of the line)
X = the level of activity

Variable
Cost per KW

X Fixed Monthly
Activity (Kilowatt Utility Charge
Hours)
McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2003
 The Analysis of Mixed Costs

Account Analysis

Engineering Approach

Scattergraph Plot

High-Low Method

Least-Square Regression Method

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 Account Analysis &
Engineering Estimates

Each account is classified as either

variable or fixed based on the analyst’s
knowledge of how the account behaves.

Cost estimates are based on an

evaluation of production methods,
and material, labor and overhead
requirements.

McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2003

 The Scattergraph Method

Plot the data points on a

Y graph (total cost vs. activity).
1,000’s of Dollars

20
* ** *
Total Cost in

* *
**
10 * *

0 X
0 1 2 3 4
Activity, 1,000’s of Units Produced

McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2003

 Quick-and-Dirty Method
Draw a line through the data points with about an
equal numbers of points above and below the line.

Y
1,000’s of Dollars

20
* ** *
Total Cost in

* *
* **
10 * Intercept is the estimated
fixed cost = $10,000

0 X
0 1 2 3 4
Activity, 1,000’s of Units Produced

McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2003

 Quick-and-Dirty Method
The slope is the estimated variable cost per unit.
Slope = Change in cost ÷ Change in units

Y
1,000’s of Dollars

20
* ** *
Total Cost in

* *
* **
10 *Horizontal
distance is Vertical distance is
the change in the change in cost.
activity.
0 X
0 1 2 3 4
Activity, 1,000’s of Units Produced

McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2003

 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

Step 1: Solve for variable cost (b)

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 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

b=
High Units – Low Units

McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2003

 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
b=
Units –– Low
High500 Low Units
Units
McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2003
 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
$1,000
Cost
b=
500 – Low
100
Units

McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2003

 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).

McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2003

 The High-Low Method

Y = a + b (x) High
$3,750 = a + $6.875(500) End
$312.50 = a
Y = a + b (x) Low
$1,000 = a + $6.875(100) End
$312.50 = a
The cost formula using the high-low method is:
Total cost = $312.50 + ($6.875 x Setup hours)
McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2003
 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

McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2003

 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

McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2003

 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.

McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2003

 Coefficient of Correlation
Positive Correlation

r approaches +1

Machine Utilities Machine Utilities

Hours Costs Hours Costs

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 Coefficient of Correlation
Negative Correlation

r approaches -1

Hours of Industrial Hours of Industrial

Safety Accidents Safety Accidents
Training Training

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 Coefficient of Correlation
No Correlation

r~0

Hair Accounting Hair Accounting

Length Grade Length Grade

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 Multiple Regression

TC = b0 + ( b1X1) + (b2X2) + . . .
b0 = the fixed cost or intercept

b1 = the variable rate for the first independent variable

X1 = the first independent variable

b2 = the variable rate for the second independent variable

X2 = the second independent variable

McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2003

 Multiple Regression
Month Mhrs Summer Utilities Cost
Jan 1,340 0 $1,688
Feb 1,298 0 1,636
Mar 1,376 0 1,734
April 1,405 0 1,770
May 1,500 1 2,390
June 1,432 1 2,304
July 1,322 1 2,166
August 1,416 1 2,284
Sept 1,370 1 1,730
Oct 1,580 0 1,991
Nov 1,460 0 1,840
Dec 1,455 0 1,833

Data for Phoenix Factory

Utilities Cost Regression

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 Multiple Regression
Constant 243.1114997159
Std Err of Y Est 55.5082829356447
R Squared 0.96717927255452
No. of Observation 12
Degrees of Freedom 9

X Coefficient(s) 1.0971575051946 510.49073361447

Std Err of Coef. 0.210226332115593 32.5489464532519

Multiple Regression for Phoenix

Factory Utilities Cost

McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2003

 Multiple Regression

The results gives rise to the following

equation:
Utilities cost = $243.11 + $1.097(Machine
hours) + ($510.49 x Summer)
R2 = .967, or 96.7 percent of the variation in
utilities cost is explained by the machine hours
and summer variables.

McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2003

 Managerial Judgment

Managerial judgment is critically

important in determining cost behavior,
and it is by far the most widely used
method in practice.

McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2003

 The Contribution Format
Total Unit
Sales Revenue $ 100,000 $ 50
Less: Variable costs 60,000 30
Contribution margin $ 40,000 $ 20
Less: Fixed costs 30,000
Net operating income $ 10,000

The contribution margin format emphasizes cost

behavior. Contribution margin covers fixed costs
and provides for income.

McGraw-Hill/Irwin © The McGraw-Hill Companies, Inc., 2003

 The Contribution Format

Used primarily for Used primarily by

external reporting. management.

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 The End

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