Steps of developing a cost estimating relationship , Managerial Accounting

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

Posted Date: 12/4/2012 7:25:11 AM | Location : United States







Related Discussions:- Steps of developing a cost estimating relationship , Assignment Help, Ask Question on Steps of developing a cost estimating relationship , Get Answer, Expert's Help, Steps of developing a cost estimating relationship Discussions

Write discussion on Steps of developing a cost estimating relationship
Your posts are moderated
Related Questions
Extensions to Linear Programming In many real situations the solutions to linear programming models make sense only if they have integer values. Rounding off the linear programmi

Conceptual understanding: defining in identifying relevant information Business application - Dave burgers is in the fast food restaurant business. One component of it's market

Exact management of receivables acquires a suitable collection policy that outlines the collection procedures. Collection policy consider as the procedure adopted through a firm to

Arrival Rates, Service Rates, and Traffic Intensity The (average) arrival rate is the rate of arrival of customers at a queue, and is often denoted by x. If 10 customers arr

Let a quarry's cost function of producing Q tons of stone per hour be given by TC = Q 3 - 10Q 2 + 40Q + 25, so that marginal cost function is MC= 3Q 2 - 20Q + 40. (i) Find th

Problem Marginal costing plays a major role in making certain decisions. It provides information to management regarding the behaviour of costs and the incidence of such costs

opening stock 19000 closing stock 21000 sales 200000 gross profit 25% on sales calculate stock turnover ratio

Explain Direct labor cost standard The setting up of standard labor cost for each product would require: a) The determination of budgeted fixed overhead for a period b) B

Transportation model Table A more compact method for representing the transportation model than the linear equations is to use what we call the transportation tableau. It is a

#questioExercise 3-12 Computing Predetermined Overhead Rates and Job Costs [LO1, LO2, LO3, LO7] Kody Corporation uses a job-order costing system with a plantwide overhead rate base