ACCO 330 - Regression analysis

ACCO 330 - Regression analysis - ACCO 330 Cost Accounting...

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ACCO 330 – Cost Accounting Cost Estimation – Regression Analysis 1 Cost Estimation Cost Estimation to Predict Future Costs Work Measurement Method High-Low Method Regression Analysis Method
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ACCO 330 – Cost Accounting Cost Estimation – Regression Analysis 2 1. Cost Estimation to Predict Future Costs Cost management information is critical in cost planning and decision making To facilitate strategic positioning analysis Firms competing on the basis of cost leadership To facilitate value-chain analysis Identify cost reductions opportunities To facilitate target costing and life-cycle costing Identify the best trade-off value
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ACCO 330 – Cost Accounting Cost Estimation – Regression Analysis 3 1. Cost Estimation to Predict Future Costs A basic requirement is to use accurate cost estimates in the planning process Cost estimation is the development of a well-defined relationship between a cost object and its cost drivers for the purpose of predicting a cost
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ACCO 330 – Cost Accounting Cost Estimation – Regression Analysis 4 2. Cost Estimation Steps 1. Define the cost object to be measured - maintenance 2. Determine the cost drivers – machine-hours 3. Collect consistent (same accounting basis) and accurate data 4. Graph the data – to identify unusual (nonlinear) patterns 5. Select an estimation method – accuracy and cost 6. Assess the accuracy of the cost estimate – potential for error
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ACCO 330 – Cost Accounting Cost Estimation – Regression Analysis 5 3. Cost Estimation Methods A .
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