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Account analysis (Inspection of accounts) method:
This method requires that departmental managers and the accountant inspect each item of expenditure within the accounts for some output level and then classify each of these items as wholly fixed, wholly variable or mixed.
A single average unit cost figure is selected for the items categorized as variable whereas a single total cost for the period is used for the items categorized as fixed.
Mixed costs are decomposed into their variable and fixed components.High low method (Two point method):
Under this method, records of costs in the previous period are reviewed and the costs of 2 periods are selected. These are the period with the highest level of outputs and the period with the lowest output. A line passing through these two points is then established and used in estimating costs.
Full cost or mark up pricing or cost plus pricing method: In this method the marketer estimates the total cost of producing or manufacturing the product and then adds it a mar
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Illustration: ABC analysis Combine items on the basis of their relative value to form three categories—A, B and C. The data in the table below illustrates the ABC analysis.
costs/per unit labor ... $ 4 materials ...5 fixed cost... $ 12 determine the break even point in units if the seeling price is $ 19 determine the break even point in sales at
limitation
how much is this service?
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