Can the constant in the cost function be used as an estimate for fixed cost (when calculating maintenance, etc.)?
The cost function is an estimate of how costs behave within the relevant range, not at cost levels outside the relevant range.
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Managerial Accounting
- Define Opportunity Cost.
- Describe the account analysis method for estimating a cost function.
- Name 4 approaches to estimating a cost function ?
- Describe three alternative linear cost functions ?
- What two assumptions are frequently made when estimating a cost function?
- Define Cost-Volume-Profit Analysis ?
- Define Operating Leverage ?
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