Which of the following involves using historical data to estimate future costs?

Forecasting is a method that involves analyzing historical data to make predictions about future costs and trends. By examining past data, businesses can identify patterns and use these insights to project how costs may behave in the future. This technique is essential for budgeting, planning, and making informed financial decisions.

The other options represent different processes or analyses. Variance analysis focuses on the differences between expected and actual performance, particularly in cost management, rather than making future cost estimations directly from historical data. Cash budget preparation is concerned with estimating future cash flows, involving both inflows and outflows, based on past performance as well, but it is more about managing liquidity rather than estimating specific costs. Cost-volume-profit analysis examines the relationships among costs, sales volume, and profit to understand how changes in one affect the others, and while it includes some forecasting elements, it is not primarily about estimating future costs based on historical data.