Gathering data-plotting graph-cost estimating relationship, Managerial Accounting

Assignment Help:

Gather data concerning the relationship among the dependent and independent variables

Collecting data is generally the most hard and time-consuming element of CER development. It is necessary that all data be checked and double checked to make sure that all observations are appropriate, comparable, and relatively free of unusual costs.

An adequate number of past observations should be acquired to derive an acceptable cost function.  This must be adjusted to reflect any change of circumstances example, changes in price levels caused by inflation, changes in kinds of equipment used, and so on. The time period used to measure the dependent variable and the cost driver must be similar.

Plot the data on a graph

The graph (generally termed to as a scatter diagram) will point out the common relationship among the dependent variable and the cost driver and will give a visual signal as to whether a lineal cost function can estimate the cost behavior. It will also highlight great observations.


Related Discussions:- Gathering data-plotting graph-cost estimating relationship

What is the responsibility of operating budget, What is the Responsibility ...

What is the Responsibility of operating budget when the operating budget of a firm is constructed in terms of responsibility areas it is called the responsibility budget shows

Electronic fund transfer, By electronic fund transfer the collection float ...

By electronic fund transfer the collection float can be completely removed the other benefit of electronic fund transfer is instant updating of accounts and reporting of balances a

What is replacement cost, Replacement cost It is the cost of replacing ...

Replacement cost It is the cost of replacing a material or asset, by purchase from the current market. If an X material was originally purchased @ Rs. 250 per Kg. And know i

Estimate the total fixed cost, Question:   (a) For a business annual sa...

Question:   (a) For a business annual sales are Rs 50,000 and variable expenses are Rs 35,000 and fixed expenses are Rs 25,000. The owner wants to earn at least Rs 5,000 as pro

Gross working capital, Financial decisions are depends on specific consider...

Financial decisions are depends on specific considerations the major being the cash flows, liquidity and cost. Short-term working capital decisions or financial decisions are diffe

Standard costing in modern environment, Standard costing in modern environm...

Standard costing in modern environment Standard costing has traditionally been associated with labor-intensive operations, but it can be applied to capital-intensive production

Operating leverage, How do you compare two companies operating leverage? Mu...

How do you compare two companies operating leverage? Must the sales volume be set the same or the net operating income?

Graphical method, GRAPHICAL METHOD Graphical methods can be used in gam...

GRAPHICAL METHOD Graphical methods can be used in games with no saddle points and having pay off m X 2 or 2 X n matrix. The aim is to substitute a much simpler 2 X 2 matrix for

Engineering method-cost estimation method, Engineering method These met...

Engineering method These methods are based on the use of engineering analysis of technological relationship between inputs and outputs e.g. method studies and time and motion s

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd