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Unformatted text preview: rational definition is whether a company prices its products or services below "average variable cost" and, if so, predatory pricing is present. Chapter 11 Forensic and Investigative Accounting 4 Estimating Cost Behavior Patterns
Graphic analysis and high-low method Regression/correlation analysis Simple linear regression Variables Least squares regression line Standard error of the estimate (continued on next slide)
Chapter 11 Forensic and Investigative Accounting 5 Estimating Cost Behavior Patterns
Correlation analysis Coefficient of correlation Coefficient of determination Coefficient of nondetermination Association vs. causation Movements in the independent variable Reasons for the unexpected Chapter 11 Forensic and Investigative Accounting 6 Reasons for the Unexpected
Some of the accounting reasons that regressions may yield unexpected or perplexing results include: Allocations. Transfer prices. Entity concept. Accounting policies. Forensic accountants must be adequately informed about the nature and operation of the accounting system for each and every business that they are evaluating.
Chapter 11 Forensic...
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