Free Essay

Cost Estimation

In: Business and Management

Submitted By Piveen
Words 275
Pages 2
Source:
Hilton & Plat 2015
Case Study Chapter 6
Cost Estimation
Organization
Period
Expenditure
Cost Behavior

:
:
:
:

ABC Donuts Tasty Sdn Bhd
Jan 20XX - Dec 20XX
Utility bill
Semi Variable

Account Classification / Visual-Fit Method /
Cost Estimation MethodHigh Low Method / Least Square Regression
:
Method

Ledger

Expenditure

Utilities

Cost Monthly

Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
TOTAL

$
$
$
$
$
$
$
$
$
$
$
$
$

5,100
5,300
5,650
6,300
6,400
6,700
7,035
7,000
6,200
6,100
5,600
5,900
73,285

Cost Estimation Method
Activity or Cost Driver dozens of bakery items number of sold per month customers per
75,000
8,000
78,000
8,100
80,000
9,000
92,000
10,000
98,000
11,000
108,000
10,000
118,000
12,000
112,000
9,000
95,000
8,000
90,000
7,500
85,000
10,000
90,000
15,000
1,121,000
117,600

Cost Estimation Method
Engineering Method

Using relevant research techniques, the production team has conducted a research from ground up trying to identify whether utlities is actually affected by level of activities.
Base on the research performed, production research team has identified various activities that is related to usage of utilties.
Among the activities are:
1. Administrative activities use of computers
2. Kitchen activities using high level of electricity on kitchen appliances and water for baking donuts
3. serving customers activities at the front line also requires usage of utilities including air-conditioning, lighting to display case
Hence, it may be concluded that
1/3 of the utilties is expected to be fixed while the remaining utilities cost

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