5 steps of separating semi-variable cost using the scatter graph technique

5 steps of separating semi-variable cost using the scatter graph technique

A scatter graph technique is the method of separating semi-variable costs into fixed and variable elements. This method is also known as the regression line method. This method is based on past data, but it takes into account all data as compared to the high low method which considers only the highest and lowest items in the given data. This article provides five steps you should follow when segregating or separating semi-variable cost by using a scatter graph technique read more

Contribution margin – meaning

The contribution is the difference between the selling price and variable cost (or marginal cost) is known as `contribution’ or `gross margin’. It may be considered as some sort of fund from out of which all fixed costs are met. The difference between contribution and fixed cost represents either profit or loss, as the case may be.

The contribution is calculated using the following formula:

Contribution = Selling Price – Variable Cost= Fixed Cost + Profit Or – Loss read more

5 steps involved in segregating semi-variable cost using the high low method.

SEMI FIXED COST SEGEGRATION

The high low method is the method of segregating semi-variable cost which is based on the analysis of the past records of expenses. This method takes into account only the highest and the lowest values contained in the data in order to determine the rate of cost change and thereafter variable cost read more

What is variable costs?



Variable cost is the cost which, in aggregate, tend to vary in direct proportion to changes in volume of output or turnover. =&0=&

  • Linear variable cost or engineered cost. this is one in which relationship between variable cost and output can be shown as straight line in the graph.
  • Non linear or curve linear variable cost. this occur when the relationship between variable cost and output can be shown as curved line on the graph.
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