Which cost estimating method calculates expenses based on prior year's expenditures adjusted for various changes?

The method that calculates expenses based on prior year's expenditures adjusted for various changes is known as the experience method. This approach relies on historical spending patterns and actual data from previous years to form a baseline for future budgeting. Adjustments can be made to account for anticipated changes such as inflation, modifications in service levels, or policy shifts that might impact costs in the upcoming year.

Utilizing the experience method allows for a more pragmatic approach to budgeting, as it leverages real-world data, making it more grounded in the organization's financial history. This method can significantly enhance the accuracy of forecasts as it takes into account the unique financial circumstances of the organization.

The other options describe different cost estimation techniques. The ground-up method involves building a budget from scratch based on detailed analysis of activities and expected inputs. The unit-based method estimates costs on a per-unit basis, focusing on individual items or services rather than overall historical expenditures. Standard costing defines predetermined costs for products or services, which may not directly relate to historical spending patterns. Each of these methods serves different purposes in financial planning and budgeting but does not specifically adjust prior year's expenditures as the experience method does.