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

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.

Posted Date: 12/4/2012 7:34:09 AM | Location : United States







Related Discussions:- Gathering data-plotting graph-cost estimating relationship, Assignment Help, Ask Question on Gathering data-plotting graph-cost estimating relationship, Get Answer, Expert's Help, Gathering data-plotting graph-cost estimating relationship Discussions

Write discussion on Gathering data-plotting graph-cost estimating relationship
Your posts are moderated
Related Questions
Disadvantages of ratio analysis 1) False results: ratios are based upon the financial statement. In case financial ratio is incorrect or the data upon which ratios are based

Winner says, "It is clear that in decades to come a great many things like telephone answer machines and automatic bank tellers will become, in effect, members of our society." Mor

Cost comprise impact Some of the policy choices which tend to have the maximum impact on cost comprise: Product performance, configuration, and characteristics Mix and

Explain the concepts of costs. A cost accountant is mainly concerned with the following cost concepts. 1. Concept of objectives: it is this concept that gives direction to


State Budgetary Control A budget is a quantitative expression of a plan of action relating to the forthcoming budget period. It represents a written operational plan of managem

Improvement in product design may result in cost reduction illustrated below: 1) Material cost : change in design of the product may result in saving in material cost. Economi

SENSITIVITY ANALYSIS OF EOQ MODEL Sensitivity Analysis is regarded with the manner in which those results of solutions change in response to change in model parameters.

Multi-collinearity Multiple regression analysis is based on the assumption that the independent variables are not correlated with each other, whenever the independent variables

Responsibility Accounting This is a term used to define the measuring of performance of decentralized units, using account results. Responsibility accounting recognizes various