Understanding Fixed and Mixed Costs: Analysis and Methods

400,000 advertising, public relations costs, management development costs. These costs arise from decisions on graphic 2.4. • Discretionary Fixed Cost Namely costs that can be eliminated if management does not want it, costoh: costs activity changed. The picture of the total fixed cost reaction to the volume of activity can be shown still, Graphics 2.5. Graphics total fixed cost Number of Motorcycle Products Fixed costs are costs that do not change in total despite volume Total Fixed Cost employee. These costs are associated with long-term investments, such as asset ownership 100 200 300 400 unit FIXED COST discontinued, for example are: depreciation expenses, property insurance, management salary expenses and 0 That is a cost that cannot be eliminated at all even though the company's operations 200,000 100,000 13 • Committed Fixed Cost Tipe fixed cost terdiri atas: (1) Committed Fixed Cost dan (2) Discretionary Fixed Cost. 300,000 short term (annual decision) management so it is also called managed fixed cost. Tipe Fixed Cost $

Total Cost of Machine Maintenance Number of machine hours $1,400 per hour $925 per hour $783 per hour $725 per hour semivariable cost. Examples of mixed costs such as: machine maintenance costs as shown 100 200 300 400 unit (Maintenance Cost) $ 100,000 $ 140,000 $ 185,000 $ 235,000 $ 290,000 ? Change there is a variable cost element and a fixed cost element, this causes this cost to be mentioned as well 100,000 0 (machine hours) 0 hours 100 hours 200 hours 300 hours 400 hours 500 hours activity volume. This disproportionate change is due to mixed costs Mixed costs are costs that change disproportionately because of changes 200,000 AND MIXED COST 300,000 X 400,000 When the graph above is presented in tabular form, the change in machine maintenance costs based on changes in the volume of machine activity are as follows: Grafik 2.6. Grafik total mixed cost 14 with the following graph: $

June 15 February Mixed cost analysis with this method observes the costs that occur at 2 points, namely point Based on the disproportionate changes above, it is difficult to do April 8,000 High activity level (June) $7,900 $8,500 $7,400 $8,200 $9,100 $9,800 $7,800 1. The High-Low Method 3. The Least-Square Method The highest and lowest activities from the data table above are as follows: 3,000 July cost and how much part of the fixed cost in the mixed cost . For this separation, Example: $7,400 May predict the cost of maintaining the machine if the machine will be employed for 500 hours. For highest activity and lowest activity point. The difference in costs at the 2 points is then divided Low activity level (March) THE HIGH-LOW METHOD March $9,800 Machine Hours Maintenance Cost 2. The Scattergraph Method January $2,400 Change observed mixed cost analysis was carried out which includes three types of methods, namely: Month Machine Hours Maintenance Cost 5,600 7,100 5,000 6,500 7,300 8,000 6,200 5,000 with the difference in activity to get variable cost rates. To help in predicting the above costs, it is necessary to separate the variable parts