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
UNCERTAINTY OF DEMAND Demand is the most troublesome variable to predict accurately. Actually, demand may fluctuate from day to day, from week to week or from month to month. T

Change of Technology: Changes in technology commonly leads to improvements in the efficient processing of raw material, reduce in wastages, more speedy production and higher produ

Controlling material flow Figure below outlines the progressive stages in purchasing, issuing and recording materials in a manufacturing concern. An efficient system of docume

using the operating cycle and any other financial management knowledge,discuss the applicabilty of such cycle to poultry

BREAK EVEN ANALYSIS Break even analysis is mainly used to explain the relationship between the cost incurred, the volume operated at and the profit earned. To compute the breakev

Stock-out costs These are the opportunity costs of running out of stock. They comprise: 1) The costs of lost customer sales, and therefore lost contribution to fixed costs.

1) What is the difference between decreasing marginal returns and negative marginal returns?   2.) "A firm in monopolistic competition maximizes its profit by producing where it

In the current corporate world, this is a common practice of companies along with surplus cash to lend to another company for a short period generally ranging from 60 days to 180 d

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

School problem is asking to calculate the work in progress inventory for the beginning of a month without providing previous month data.