| account-classification method (also called account analysis) | A cost-estimation method involving a careful examination of the ledger accounts for the purpose of classifying each cost as variable, fixed, or semi-variable.
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| coefficient of determination | A statistical measure of goodness of fit; a measure of how closely a regression line fits the data on which it is based.
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| committed cost | A cost that results from an organization's ownership or use of facilities and its basic organization structure.
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| cost behavior | The relationship between cost and activity.
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| cost estimation | The process of determining how a particular cost behaves.
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| cost prediction | Forecast of cost at a particular level of activity.
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| curvilinear cost | A cost with a curved line for its graph.
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| dependent variable | A variable whose value depends on other variables, called independent variables.
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| discretionary cost | A cost that results from a discretionary management decision to spend a particular amount of money.
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| engineered cost | A cost that results from a definitive physical relationship with the activity measure.
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| engineering method | A cost-estimation method in which a detailed study is made of the process that results in cost incurrence.
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| experience curve | A graph (or other mathematical representation) that shows how a broad set of costs decline as cumulative production output increases.
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| fixed cost | A cost that does not change in total as activity changes.
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| goodness of fit | The closeness with which a regression line fits the data upon which it is based.
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| high-low method | A cost-estimation method in which a cost line is fit using exactly two data points—the high and low activity levels.
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| independent variable | The variable upon which an estimate is based in least-squares regression analysis.
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| learning curve | A graphical expression of the decline in the average labor time required per unit as cumulative output increases.
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| least-squares regression method | A cost-estimation method in which the cost line is fit to the data by statistical analysis. The method minimizes the sum of the squared deviations between the cost line and the data points.
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| multiple regression | A statistical method in which a linear (straight-line) relationship is estimated between a dependent variable and two or more independent variables.
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| outlier | A data point that falls far away from the other points in a scatter diagram and is not representative of the data.
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| regression line | A line fit to a set of data points using least-squares regression.
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| relevant range | The range of activity within which management expects the organization to operate.
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| scatter diagram | A set of plotted cost observations at various activity levels.
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| semi-variable (or mixed) cost | A cost with both a fixed and a variable component.
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| simple regression | A regression analysis based on a single independent variable.
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| step-fixed cost | A cost that remains fixed over wide ranges of activity, but jumps to a different amount for activity levels outside that range.
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| variable cost | A cost that changes in total in direct proportion to a change in an organization's activity.
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| visual-fit method | A method of cost estimation in which a cost line is drawn through a scatter diagram according to the visual perception of the analyst.
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