Continuous probability distribution, Managerial Accounting

CONTINUOUS PROBABILITY DISTRIBUTION (USE OF NORMAL DISTRIBUTION)

In reality the C-V-P variables might take any values in a continuous range. It could therefore be more appropriate to use a continuous probability distribution such as the normal distribution with an estimated mean and standard deviation. Estimates may be made of the expected sales volume, the expected selling prices, the expected variable cost and the expected fixed costs together with their probabilities.

It would therefore be possible to compute the expected profit and the likelihood that the company would break even or achieve a given target profit.

Posted Date: 12/5/2012 7:24:23 AM | Location : United States







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