Standard error of the slope, Managerial Accounting

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Std error of the slope (Sb)

Correlation coefficient measures the degree of association between two variables such as the cost and the activity level.

The standard error of ‘b’ coefficient can be expressed as follows:

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For calculation purposes,

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We can then use Sb to construct confidence intervals using t distributions such that the true variable cost, B, will be:

b – tcSb  ≤ B ≤ b + tcSb

Where b is the estimated value of B

 

 


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