What are Capital Expenditures (CAPEX)?
Capital Expenditures, or CAPEX for short, are cash or credit payments to acquire goods or services that we capitalize in balance sheet assets. From the company’s perspective, we consider those to be an investment. Here we include all expenses that are not shown on the Income Statement and do not affect profit and loss for […]
Least-Squares Method to Estimate the Cost Function
Introduction Linear regression is considered the most accurate method in segregating costs into Fixed and Variable components. Like the High-Low Method and other methods, the Least-Squares Method follows the same simple linear cost function: However, most people consider the Least-Squares Method more accurate, as it computes Fixed and Variable Costs mathematically. When looking into costs, […]
The Absorption Costing Method
Today we take a look at the Absorption Costing Method and how it is used to allocate cost to produced goods. Do not forget to download the Excel working file at the end of the article. What is Absorption Costing? Absorption Costing is a management accounting method for accumulating all costs associated with production in […]