What are the advantages of using the high or low estimates?

What are the advantages of using the high or low estimates?

A major advantage of the high-low method of cost estimation is its ease of use. By only requiring cost information from the highest and lowest activity level and some simple algebra, managers can get information about cost behavior in just a few minutes.

Is a cell phone a fixed or variable expense?

Fixed expenses are consistent and expected bills you pay each month, such as a mortgage or rent, a cellphone bill and a student loan payment. Car insurance, home insurance and life insurance are also fixed payments, along with your monthly electric and water bills….

Is electricity and water a fixed cost?

Utilities– the cost of electricity, gas, phones, trash and sewer services, etc. However, utilities are generally considered fixed costs, since the company must pay a minimum amount regardless of its output….

Is employee salary a fixed cost?

Wages paid to workers for their regular hours are a fixed cost. Any extra time they spend on the job is a variable cost. In a factory that makes dresses, the variable costs are the fabric and the labor used to make the dresses….

Is electricity a direct cost?

Therefore, the electricity cost is a direct production department cost that is variable since it changes with the volume of products manufactured. On the other hand the salaries of the production department supervisors are a direct production department cost that is fixed.

Is packaging direct or indirect expense?

The packaging costs are direct variable costs associated with the product because they vary with the number of devices produced. An indirect variable cost is an expense directly related to a cost object, or a product. The total cost associated with the cost object changes as the production level changes.

Are salaries direct or indirect costs?

Indirect costs are expenses that apply to more than one business activity. Unlike direct costs, you cannot assign indirect expenses to specific cost objects. Examples of indirect costs include rent, utilities, general office expenses, employee salaries, professional expenses, and other overhead costs….

What is a good direct to indirect ratio?

In most companies, the ratio of direct labor to indirect labor is about 3 to 1. The better companies get closer to 4 to 1….

What is the indirect cost ratio?

Indirect Cost Ratio (ICR) ICRs measure the total indirect costs of managing a fund and includes management costs.

What is the average G&A rate?

25 percent

What is indirect selling expense?

Indirect selling expenses are costs that occur throughout the manufacturing process and after the product is finished. Direct costs are directly related to the specific product being sold. Indirect costs are basically items that money is spent on in order to earn sales.