Standard error of estimate , Managerial Accounting

Assignment Help:

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.

 


Related Discussions:- Standard error of estimate

Definition of the mission and goals of the organization , Definition of the...

Definition of the Mission and Goals of the Organization Generally the organization has already established mission and aim statements. Though, it may be essential to redefine

Capital budgeting – planning investments, The management of Popular Stores ...

The management of Popular Stores Sdn. Bhd. are in the process of exploring the company’s investment opportunities.

Introduction to performance evaluation, Introduction to Performance Evaluat...

Introduction to Performance Evaluation Performance evaluation deals with the area of MA that is concerned with: 1) Holding individual managers responsible for certain aspect

Explain the mark up pricing, Full cost or mark up pricing or cost plus pric...

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

Profi t Planning, SK 2 Chapter 10: Master budgeting Objective How organisat...

SK 2 Chapter 10: Master budgeting Objective How organisations strive to achieve their financial goals by preparing a number of budgets that together form an integrated business pla

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

Capital budgeting – planning investments, Project C would involve a current...

Project C would involve a current outlay of $50,000 on equipment and $15,000 on working capital. The investment in working capital would be increased to $21,000 at the end of the f

Time series, How to solve a Time Series problem for a five year period

How to solve a Time Series problem for a five year period

Significance points of variance, Significance points of Variance The fo...

Significance points of Variance The following significant points must be kept in mind: Controllability:   Controllability should also influence the decision whether t

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