Steps of graphic analysis, Managerial Accounting

Assignment Help:

Steps of Graphic Analysis

There are four steps in using graph paper to study cost-volume relationships:

Step 1: Compute the scale which you will use:

Volume is considered as the independent variable and will be graphed on the horizontal axis. Cost is considered as the dependent variable and will be graphed on the vertical axis. The scales on two axes do not comprise to be similar. Though, on each axis one block should symbolize the same quantity of change as every other block of the similar size on that axis. Each scale must be large adequate to allow analysis, and small adequate to allow the graphing of all available data and predictable data estimates.

Step 2: Plot the accessible cost-volume data:

Determine the volume specified for one of the data points on the horizontal axis. Now draw an imaginary vertical line from that point. Find the associated cost on the vertical axis and draw an imaginary horizontal line from that point. The point where two lines intersect symbolizes the cost for the given volume. (When you do not feel comfy with imaginary lines you might draw dotted lines to put the intersection.) Replicate this step for each data point.

Step 3: Fix a straight line to the data:

In this part of text, all data points will fall on a straight line. All that you contain to do to fit a straight line is attach to the data points. Most of the analysts use regression analysis to fit a straight line whenever all points do not fall on the line.

Step 4: Predict the cost for a specified volume:

Draw an imaginary vertical line from offered volume to the point where it intersects the straight line which you fit to the data points. Then move horizontally till you intersect the vertical axis. That point is the graphic approximation of the cost for the specified volume of the item.


Related Discussions:- Steps of graphic analysis

Minimal regret criterion-laplace criterion of rationality, Minimal Regret C...

Minimal Regret Criterion : This method seeks to minimize the maximum regret that would occur from choosing a particular strategy or alternative.  The regret is the opportunit

Research and writing assignment, Write a response to your boss, the control...

Write a response to your boss, the controller. The response should be 2-5 pages in length (double-space). Your response to the controller should include, but not be limited to, t

Ageing schedule, Ageing Schedule: AS is classifies outstanding accounts r...

Ageing Schedule: AS is classifies outstanding accounts receivable at a specified point of time into various age brackets. A clarifying ageing schedule is specified below.

Costing and Budgetory Control, Given budgeted figures and actual, then anal...

Given budgeted figures and actual, then analyses each fixed cost into its components

Recognition of the organization''s decision, Recognition of the Organizatio...

Recognition of the Organization's Decision Units and Decision Packages ZBB decision unit is an operating division for which decision packages are generated and analyzed. It ca

Prepare a fixed budget and a flexible budget, Question: A company has b...

Question: A company has budgeted to produce and sell 10,000 units of a product, the selling price and the variable cost per unit of which is Rs 20 and Rs 12 respectively. Fixe

The search for alternative courses of action, The Search for Alternative Co...

The Search for Alternative Courses of Action The second stage of the decision-making model is a search for a range of possible courses of action (or strategies) that might enab

Steps of graphic analysis, Steps of Graphic Analysis There are four ste...

Steps of Graphic Analysis There are four steps in using graph paper to study cost-volume relationships: Step 1: Compute the scale which you will use: Volume is considered

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

Focus on traditional standard costing - kaizen costing, What have to Focus ...

What have to Focus on Traditional standard costing In traditional cost systems focus is to meet standard cost measurement by avoiding unfavorable variances. Under kaizen coat

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