The account analysis approach to estimating fixed and variable costs

Question

Quizplus · Accepted Answer

The account analysis approach relies on the manager's professional judgment to classify costs as either fixed, variable, or mixed based on their behavior in relation to changes in activity levels. It does not necessarily require a specific amount of historical data, nor is it limited to situations where other methods cannot be applied, and it can be useful for all types of expenses, including general and selling expenses.

The Account Analysis Approach to Estimating Fixed and Variable Costs