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

Problrm question, The std cost of chemical mixture~PQ is as follows: 40% of...

The std cost of chemical mixture~PQ is as follows: 40% of material P @rs.400/kg 60% of material Q @rs.600/kg A std loss of 10% is normally anticipated in pdn. The followinng parti

Continuous probability distribution, CONTINUOUS PROBABILITY DISTRIBUTION (U...

CONTINUOUS PROBABILITY DISTRIBUTION (USE OF NORMAL DISTRIBUTION) In reality the C-V-P variables might take any values in a continuous range. It could therefore be more appropriat

Assignment help , Excercise 2-5 Granger products had the following transac...

Excercise 2-5 Granger products had the following transactions for the just completed month. The company had no beginning inventories. a)$75,000 in raw materials were purchased

Vogel''s approximation method (vam), Vogel's Approximation Method (VAM) ...

Vogel's Approximation Method (VAM) This method is a heuristic and usually provides a better starting solution than the two methods described above. However, VAM generally yield

What are the characteristics of standard costing, Characteristics of standa...

Characteristics of standard costing 1) Flow of information : in a standard costing system cost information flows in a straight forward manner as material is requisitioned and

Annual cash flows over the expected life of the equipment, The production d...

The production department has been investigating possible ways to trim total production costs. One possibility currently being examined is to make the paint cans instead of purchas

Analysis, Analysis Various business decisions have recurrent themes: wh...

Analysis Various business decisions have recurrent themes: whether to the outsource production or to the support functions, what level of production and pricing to establish, w

Calculate the total revenue obtainable when the market clear, Question: ...

Question: (a) (I) The following equations relate to the market conditions for pullovers at a given point of time: Demand Function: Q d = 1200 - P Supply Function: Q s

Marginal costing technique, how company apply marginal costing techniques s...

how company apply marginal costing techniques show with an example

Cyclic chains-recurrent state, Cyclic Chains: In Markov Chains the cur...

Cyclic Chains: In Markov Chains the current state of the system depends on all previous states. It is a stochastic process.  Sometimes transition probability matrices are diff

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