COST ACCOUNTING A DATA ANALYTICS
APPROACH CHAPTERS 1 TO 14 REVIEW PAPER
2026 COMPLETE QUESTIONS WITH EXPERT
SOLUTIONS AND MARKING SCHEME
◉ cost function is measure based on (2) assumptions:
Answer: 1. variations in level of single activity (cost driver) explain
variations in related total costs
2. cost behavior is approximated by linear cost function w/in rel
range
◉ Cost Function
Answer: mathematical representation of how a cost changes with
changes in the level of an activity relating to that cost.
◉ Graphically, the total cost versus the level of a single activity
related to that cost is
Answer: a straight line within the relevant range.
◉ relevant range
Answer: rage of activity w/ relationship b/t cost and activity
,◉ Linear cost function
Answer: total costs vs lvl of a single act related to that cost is a single
straight line w/in relevant range
◉ Types of linear cost functions:
Answer: -variable
-fixed
-mixed
◉ variable costs
Answer: costs that change in total in relation to some chosen activity
or output
◉ variable costs in total changes
Answer: proportionately with changes in activity within the relevant
range
◉ variable costs per unit
Answer: remains constant for each additional unit as long as activity
is in the relevant range
◉ Fixed costs
, Answer: costs that do not change in total in relation to some chosen
activity or output
◉ Fixed costs in total
Answer: remains the same even when activity changes within the
relevant range
◉ Fixed costs per unit changes
Answer: each time the level of activity changes due to the fixed
nature of the related costs
◉ Mixed costs
Answer: costs that have both fixed portion that is incurred even
when facility is unused, and variable components that increase with
usage; also called semivariable costs. Utilities behave like this
typically
◉ Variable Cost =
Answer: Slope (coefficient)
◉ Fixed Cost =
Answer: Intercept (constant)
APPROACH CHAPTERS 1 TO 14 REVIEW PAPER
2026 COMPLETE QUESTIONS WITH EXPERT
SOLUTIONS AND MARKING SCHEME
◉ cost function is measure based on (2) assumptions:
Answer: 1. variations in level of single activity (cost driver) explain
variations in related total costs
2. cost behavior is approximated by linear cost function w/in rel
range
◉ Cost Function
Answer: mathematical representation of how a cost changes with
changes in the level of an activity relating to that cost.
◉ Graphically, the total cost versus the level of a single activity
related to that cost is
Answer: a straight line within the relevant range.
◉ relevant range
Answer: rage of activity w/ relationship b/t cost and activity
,◉ Linear cost function
Answer: total costs vs lvl of a single act related to that cost is a single
straight line w/in relevant range
◉ Types of linear cost functions:
Answer: -variable
-fixed
-mixed
◉ variable costs
Answer: costs that change in total in relation to some chosen activity
or output
◉ variable costs in total changes
Answer: proportionately with changes in activity within the relevant
range
◉ variable costs per unit
Answer: remains constant for each additional unit as long as activity
is in the relevant range
◉ Fixed costs
, Answer: costs that do not change in total in relation to some chosen
activity or output
◉ Fixed costs in total
Answer: remains the same even when activity changes within the
relevant range
◉ Fixed costs per unit changes
Answer: each time the level of activity changes due to the fixed
nature of the related costs
◉ Mixed costs
Answer: costs that have both fixed portion that is incurred even
when facility is unused, and variable components that increase with
usage; also called semivariable costs. Utilities behave like this
typically
◉ Variable Cost =
Answer: Slope (coefficient)
◉ Fixed Cost =
Answer: Intercept (constant)
