Describe the account analysis method for estimating a cost function.

A$.$ The account analysis method estimates cost functions on the basis of analysis and opinions about costs and their drivers gathered from various departments of a company $($purchasing$,$

process engineering, manufacturing, employee relations, etc.$).$

B$.$ The account analysis method estimates cost functions by classifying cost accounts in the subsidiary ledger as variable, fixed, or mixed with respect to the identified level of activity. Typically,

managers use qualitative, rather than quantitative, analysis when making these cost$-$classification decisions.

C$.$ The account analysis method uses a formal mathematical method to fit cost functions to past data observations. Excel is a useful tool for performing the account analysis method.

D$.$ The account analysis method estimates cost functions by analyzing the relationship between inputs and outputs in physical terms.