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make or buy decisions under limiting factorsone reason for buying productsservices from another organisation is the scarcity of resources so that the
make or buy decisions no limiting factorsthe choice between making and buying a given component is one which is likely to face all businesses at some
assumptions for relevant coststhe key assumptions made in relevant costing arethe cost behavior is recognizedthe amount of fixed costs unit variable
relevant costs for non-routine decisionsa relevant cost is a cost that is appropriate to a specific management decision to be relevant a cost should
financial planning programssuch programs differ in complexity some simple programs can include only those variables discussed while other more
cvp analysis and computer applicationsthe output from a cvp model is only as good as the input the analysis will include assumptions about sales mix
continuous probability distribution use of normal distributionin reality the c-v-p variables might take any values in a continuous range it could
point estimate of probabilitiesthis approach requires a number of different values for each of the uncertain variables to be selected these might be
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