BEC 4 M1 Projection and Forecasting Techniques Flashcards
A regression equation
a statistical model that estimates the dependent variables based on changes in the independent variable.
Straight line equation (total costs method)
y=(variable cost*x)+ficed Cost)
High Low method
highest cost-lowest cost/highest quantity-lowest quantity
R-squared
indicates the extent to which a change in the independent variable explains a change in the dependent variable.
Method that can be used to separate costs into fixed and variable components
regression analysis
Learning Curve
When cumulative quantities double, average cost per unit decreases by learning curve % (50 hours * 80%=40 hours). Production becomes more efficient.
Which method is best for productions with long runs?
Learning Curve, as its used to determine increases in efficiency of production as experience is gained.
Multiple Regression differs from simple regression because
multiple regression has more independent variables
Coefficient of determination
measures the proportion of the total variation in the dependent variable explained by the independent variable
How to determine the fixed cost portion of the high-low method.
Substitute the variable cost and volume into y=a+bx
Probability (risk) analysis
examines possible outcomes given different alternatives
Sensitivity analysis
uses trial and error method in which sensitivity of solution to changes in variables is calculated
Probability analysis is an extension of sensitivity analysis because…
probability analysis is a more specific version of trial and error method used in sensitivity analysis
coefficient of determination is equal to…
correlation coefficient squared
