Question

Which method are managers using when they use their judgment to classify costs as​ variable

Answer 1

Account Analysis

Step-by-step explanation:

The estimation of different costs associated with the product is know account analysis. In this method the cost is measured into three categories as below

1. Variable cost
2. Fixed Cost
3. Mixed Cost

All these costs are calculated using linear algebra as below

Y= B + MX

where

Y is the total costs of product

B = Fixed Cost of the product

M = Variable cost of the product

X = Number of Units