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
INVENTORY PLANNING AND CONTROL The main goal of "inventory control" is to discover and maintain the optimum level of investment in all types of inventories, from raw materials

1)Prepare a three (3) year forecast of estimated future cash flows for you company and give valid economic/business reasons for your projections. This means you will have a stateme


Describe the impact of different types of standards on motivations and specifically,the likely effect on motivation of adopting the labor standard recommended?

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

Explain TWO limitations of using accounting ratios to assess the performance of a firm and suggest how each limitation may be improved

Hornsby Manufacturing has four categories of overheads. The four categories and the expected overhead costs for each category for next year are as follows:   Maintenance  $140,000

This variable deals along with the granting of credit. On one great all the customers are granted credit and conversely, none of them are granted credit irrespective of their credi

When the stock market is going up over a long period of time, investors can become complacent about the risks of being a stockholder. After the significant decline of the stock mar

Kibble Company had the following functional income statement for the month of July 2011: Kibble Company Functional Income Statement For the Month Ending July 31, 2011 Sales ($40 x