2 incremental unittime learning model the incremental

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Unformatted text preview: oming better at their jo bs. Two models used to capture different forms of learning are 1. Cumulat ive average­t ime learning model. The cumulat ive average t ime per unit declines by a constant percentage each time the cumulat ive quant it y of unit s produced doubles. 2. Incremental unit­time learning model. The incremental t ime needed to produce the last unit declines by a constant percentage each t ime the cumulat ive quantit y o f units produced doubles. 10­12 Frequent ly encountered problems when co llecting cost data on variables included in a cost funct ion are 1. The time period used to measure the dependent variable is not properly matched wit h the time period used to measure the cost driver(s). 2. Fixed costs are allo cated as if they are variable. 3. Data are either not available for all observations or are not uniformly reliable. 4. Extreme values of observations occur. 5. A ho mogeneous relationship between the individual cost items in the dependent variable cost pool and the cost driver(s) does not exist. 6. The relat ionship between the cost and the cost driver is not stationary. 7. Inflat ion has occurred in a dependent variable, a cost driver, or both. 10­2 10­13 Four key assumptions examined in specificat ion analysis are 1. Linearit y of relat ionship between the dependent variable and the independent variable within the relevant range. 2. Constant variance of residuals for all values of the independent variable. 3. Independence of residuals. 4. Normal distribut ion of residuals. 10­14 No. A cost driver is any factor whose change causes a change in the total cost of a related cost object. A cause­and­effect relat ionship underlies selection of a cost driver. Some users o f regression analys is include numerous independent variables in a regressio n model in an attempt to maximize goodness of fit, irrespect ive o f the econo mic plausibilit y o f the independent variables included. Some of the independent variables included may not be cos...
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