Standard error of estimate , Managerial Accounting

Standard error of estimate (Se)

The coefficient of determination r2 gives us an indication of the reliability of the estimate of total cost based on the regression equation but it does not give us an indication of the absolute size of the probable deviations from the line established. This information can be obtained by calculating the standard error of estimate given by the following formula.

2106_se1.jpg

For computation purpose,

2384_se2.jpg


Where k is the no. of independent variables

The calculation of the standard error is necessary because the least square line was calculated from sample data. The other samples would most likely outcome in different estimates. Obtaining the least square calculation over all the possible observations that might occur would result in the calculation of the true least square line. The question is “How near does the sample estimate of least square line come to the accurate least square line.

 

Posted Date: 12/5/2012 5:28:52 AM | Location : United States







Related Discussions:- Standard error of estimate , Assignment Help, Ask Question on Standard error of estimate , Get Answer, Expert's Help, Standard error of estimate Discussions

Write discussion on Standard error of estimate
Your posts are moderated
Related Questions
INTERPRATATION OF VARIANCE Controllability, Materiality and Trend are the interpretation of variance. The point of comparing flexed budget and real figures is to see what corre

Operating Cycle Method In this way, total operating expenses for a period are divided via the number of operating cycles in the relevant period to compute the cash need for wor

Explain the cost According to controllability: Controllable cost: this is a cost which can be inclined by the action of a specified member of an undertaking. The organization

A few of the main focus areas of treasury operations are as follows: 1) Cash Flow-Receipts and Disbursements: Accelerating the collection of cash receipts and mobilization or

Introduction to pricing decision A pricing decision is one of the most crucial and difficult decision that a firm has to make. It is one of the most difficult decisions. Such

State Material price variance Difference among standard price and the actual price of the material is the material price variance. This variance arises because of various facto

Full cost or mark up pricing or cost plus pricing method: In this method the marketer estimates the total cost of producing or manufacturing the product and then adds it a mar

Multi-stage decision making under risk (The use of decision trees) Sequencing is concerned with the selection of an appropriate sequence or order of performing a series of jobs

engineering method of cost estimation

After determining the amount of working capital as in above, a specific amount say 5 percent or 10 percent may be added to cover contingencies. This is to be noted that facts depen