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

Marginal profit or cost, Maximum change in marginal Profit or Cost Just...

Maximum change in marginal Profit or Cost Just as we did in studying the permissible ranges for changes in resources, we are also interested in studying the permissible ranges

What are the advantages of ratio analysis, Advantages of ratio analysis ...

Advantages of ratio analysis 1) Helpful in financial analysis: financial analysis is easier if accounting ratios are used to analyze the different financial statement relatio

Strategic plan, How to write introduction on strategy plan

How to write introduction on strategy plan

Interpreting the simplex tableau- sensitivity analysis, INTERPRETING THE SI...

INTERPRETING THE SIMPLEX TABLEAU We can now see that our attention must be directed to reading, interpreting and analyzing the (simplex) results. It is erroneous, however, to a

Line of credit, It is a commitment by a bank to lend a specific amount of f...

It is a commitment by a bank to lend a specific amount of funds on demand identifies the maximum amount of unsecured credit the bank will allow the customer to borrow at any time.

State the target pricing method, Rate of return or target pricing method ...

Rate of return or target pricing method Under this method of price determination first of all a rate of return desired by the enterprises on the amount of profit capital inves

Explain sales budget, Explain Sales budget A sales budget is an estimat...

Explain Sales budget A sales budget is an estimate of expected sale during a budget period. A sales budget is known as a nerve center or backbone of the enterprise. The degree

Use of budgetary controls, Use of Budgetary controls Budgetary controls...

Use of Budgetary controls Budgetary controls are used for the following reasons: 1) To state the objectives of the organization as a whole. 2) To reveal the extent by whi

Value chain analysis , VALUE CHAIN ANALYSIS Every firm is a collection...

VALUE CHAIN ANALYSIS Every firm is a collection of activities that are executed to design, generate, market, deliver and support its products or services. Value chain analysis

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