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c-v-p analysis under uncertaintya major limitation of the basic cvp analysis is the assumption that the unit variable cost selling price and the
break even analysisbreak even analysis is mainly used to explain the relationship between the cost incurred the volume operated at and the profit
steps of graphic analysisthere are four steps in using graph paper to study cost-volume relationshipsstep 1 compute the scale which you will
graphic analysiswhenever you have two data points you should generally suppose a linear relationship when you acquire more data you can study the
algebraic analysisthe supposition of linear cost behavior allows use of straight-line graphs and simple linear algebra in cost-volume studythe net
cost-volume-profit assumptionsthe main assumptions required in c-v-p analysis are1 the relationship holds merely within the appropriate range the
cost-volume relationship utilizationcost-volume-profit study is an estimating concept which can be employed in a variety of pricing circumstances you
types of costsin short run costs can be of three general kindsfixed cost total fixed costs stay constant as volume differs in the relevant range of
cost-volume profit c-v-p analysis introductionyou can employ cost-volume-profit analysis to examine the natural relationship among cost volume and
multi-collinearitymultiple regression analysis is based on the assumption that the independent variables are not correlated with each other whenever
kinematic pair a pair is a joint of two elements which permits relative motion the relative motion among the elements of links that built a pair is
multiple regressionthe least square regression equation discussed above was based on the assumption that total cost was determined by only one
independence of observationsan important assumption for the simple linear regression model is the independence of errors in many time series models
z or t statisticsif n ge30 we use z if n lt 30 we use t statistics these statistics can be used to test the hypothesisho b o that is there is no
correlation coefficient rcorrelation coefficient measures the degree of association between two variables such as the cost and the activity levelr
testing the slopethe strong point of the relationship among the dependent variable and each of the independent variables can be determined using 3
the fndashtest the significance of the regression results can be tested by using the f- statistics the f-statistics is a ratio which compares
coefficient of determination r2if the regression line calculated by the least square method were to fit the actual observations perfectly then all
x ltd has a current ratio of 451 and acid test ratio of 31 if its inventory is rs 24000 find out its current
evaluation of the regression modelthe regression equation calculated above was based on the assumption that cost varied with the units produced
account analysis inspection of accounts methodthis method requires that departmental managers and the accountant inspect each item of expenditure
engineering methodthese methods are based on the use of engineering analysis of technological relationship between inputs and outputs eg method
choose the relationship which best predicts the dependent variableafter exploring a diversity of relationships you should select the one that can
gather data concerning the relationship among the dependent and independent variables collecting data is generally the most hard and time-consuming
select the cost driversthis might also be termed to as independent explanatory or predictor variable a cost driver can be stated as any factor whose