Steps of developing a cost estimating relationship , Managerial Accounting

Assignment Help:

STEPS OF DEVELOPING A COST ESTIMATING RELATIONSHIP

Firmly speaking, a CER is not a quantitative method. It is a framework for using suitable quantitative methods to quantify a relationship among an independent variable and cost or price. Development of a CER is a 6-step procedure as shown below:

Step1: State (or select) the dependent variable (Y)

Step2: Select the cost driver(s)

Step3: Gather data concerning the relationship among the dependent and independent variables

Step4: Plot the data on a graph

Step5: Choose the relationship which best predicts the dependent variable

Step6: Test the consistency of the cost function


Related Discussions:- Steps of developing a cost estimating relationship

Budget costing, Archie Ltd manufactures a product called Gizmo. It uses th...

Archie Ltd manufactures a product called Gizmo. It uses the following direct inputs: Price Quantity Cost per unit of output Direct materials $4 per gram 10 grams per unit $40 per

What is pricing decision, Introduction to pricing decision A pricing d...

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

Private sector companies have multiple stakeholders who are, Private sector...

Private sector companies have multiple stakeholders who are likely to have divergent interests.( five stakeholder groups and discuss their financial and other objectives).

Advantages of value added statements, Advantages of Value Added Statements ...

Advantages of Value Added Statements 1) Managers might be in a better position to control their organizations own inputs than the cost and usage efficiency of purchased materia

Determine the scope and areas of cost reduction, Determine the Scope and ar...

Determine the Scope and areas of cost reduction Scope and areas of cost reduction the scope of cost reduction is so wide that it is not practicable to develop fully the areas i

Bulk agency factoring, Bulk Agency Factoring : In this category factorin...

Bulk Agency Factoring : In this category factoring is essentially used as a method of financing book debts. In this sort of factoring the client continues to administer credit a

How much was Topaz’s operating income (income before taxes), How much was T...

How much was Topaz’s operating income (income before taxes) last year?

Inappropriate standards-implementation breakdown, Inappropriate standards (...

Inappropriate standards (or targets): This is a problem arising from deficiencies in planning. If not enough time and resources are devoted to setting accurate standards in th

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd