conditions. Standard cost is a pre determined operating cost
calculated from managements standards of efficient operation
and the relevant necessary expenditure. Need for Standard
Costs: The need for standard cost arises for the following
reasons. 1. Cost
no regular transfer of cost from one job to another 5. Work in
progress may or may not exist Procedure for Process Costing 1.
Each process is separately identified. Separate process account
is opened for each process. 2. Along with Particulars Column,
two
By evaluating the performance of each process effective
managerial control is possible. Disadvantages of Process Costing
1. Valuation of work in progress is difficult. 2. It is not easy to
value losses, wastes, scraps etc. 3. The apportionment of total
co
method, the inflation-adjusted chain ladder method, the average cost
per claim method and the Bornhuetter-Ferguson method. For these
last two methods, there is no one way of applying the method that is
universally agreed, ie you may find variations in the
this inverse function in the actuarial exam pass rates example. It is ( ) 1
1 - - = + e h m . Solution 10.12 Age is a numerical variable. However,
vehicle group is really a categorical variable. So denote age by x . The
linear predictor would be: ab g d i
car rating groups is again an improvement. However, when we start to
consider interactive effects, the degree of improvement in the model
is much less. The decrease in the deviance is not greater than twice
the decrease in the number of degrees of freedom
B. We calculate the difference in the scaled deviances (which is just
2(log log ) L L A - B ): 35.03 24.93 10.10 - = This should have a chisquared distribution with 31 2 - = degrees of freedom, which has a
critical value at the upper 5% level of 5.991. Ou
2010 Examinations The Actuarial Education Company The natural
parameter is q , so here the natural parameter is: 1 m - The variance
function is (by definition) ( ) b q , so here we find: 2 2 1 1 b b () ()
= = = Solution to exam-style question 2 (i) Expo
model fitting The parameters in a GLM are usually estimated using
maximum likelihood estimation. The log-likelihood function, ly f y ( ; , )
log( ( ; , ) = Y , depends on the parameters in the linear
predictor through the link function. Thus, maximum like
should be obtained for any particular model point. For example in the
actuarial pass rates model, we could calculate from the model what
the pass rate ought to be for students who have attended tutorials,
submitted three assignments and scored 60% on the
and the comparable actual cost incurred during a period. It is
the deviation of actual cost from the standard cost. In other
words, the deviation of the actual cost or profit or sales from
the standard cost or profit or sales is known as variance. If the
rate of Rs. 3 per unit. The actual consumption of material for
manufacturing the same product came to 60 units at the rate of
Rs. 2.9 per unit. Calculate 1. Material cost variance 2. Material
price variance 3. Material usage variance Solution: 1. Material
on cash basis, 50% of the credit sales are collected next month
and the balance in the following month. 2. Creditors - Materials 2 months -Wages 1/5 month - Overhead month 3.
Cash balance on 1st October 2010 is expected to be Rs. 8,000 4.
A machinery will
Expenses(Rs) February 70,000 40,000 8,000 6,000 March
92,000 52,000 9,000 7,000 May 1,00,000 60,000 10,000 8,000
June 1,20,000 55,000 12,000 9,000 Other information: 1. Period
of credit allowed by suppliers two months 2. 25% of sale is for
cash and the pe
accounting system. 7. Management Accounting systems
generate various reports which are extremely useful from the
Management point of view. 1.6 Management Accounting
Information and their use In the above paragraphs, we have
seen the utility of Management
Accounting Page 106 2. Activity base budgeting: The CIMA
official terminology defines activity based budgeting as, a
method of budgeting based on an activity frame work and
utilizing cost driver data in the budget setting and variance
feedback processes.
loss and abnormal loss are credited in the process account 7.
The accumulated cost of each process is transferred to
subsequent process along with output. The output of the last
process along with cost is transferred to the finished goods
account. 8. In c
showing all assets and liabilities except cash. The two sides of
the balance sheet are then balanced. The balance then
represents cash at bank or overdraft, depending upon whether
the assets total is more than that of the liabilities total or the
latter i
require standardization of product. But standard costing
requires standardization of product. Objectives of standard
costing: 1. Performance measurement 2. Cost control 3. Stock
valuation 4. Establishing selling prices 5. Profit planning and
decision maki
uncontrollable variances. Types of variances Analysis of
variances may be done in respect of each element of cost and
sales. It includes 1. Direct material variance 2. Direct labour
variance 3. Overhead variance 4. Sales variance [School of
Distance Educa
be taken into consideration while designing a costing system. I.
Size of the fi rm :- Size of the fi rm is an extremely important
factor in designing a cost accounting system. As the size of the fi
rm and its business grows, the volume and complexity of t
computer assistance. Question 10.13 You are given the following data
for hamsters medical claims, using the model above: age i x (months)
4 8 10 11 17 claim amount () 50 52 119 41 163 Write down (but do
not try to solve) the equations for the MLEs for a a
Examinations Solution 10.18 If 2 ~(, ) Y N i i m s , then the Pearson
residuals are yi i - m s . From page 27, the scaled deviance is 2 2 1 1 ( )
= = - = n n i i i i i y d m s . The deviance residuals are given by: () () - -=- = ii ii iii ii y y sign y d
Describe and apply the average cost per claim method for estimating
outstanding claim amounts. 6. Describe and apply the BornhuetterFerguson method for estimating outstanding claim amounts. 7.
Describe how a statistical model can be used to underpin a run
the distribution of the data and the link function are the same, but the
linear predictor has one extra parameter in model 2. For example, we
could compare the models with linear predictors 0 1 + x and
01 2 2 + + x x . But we could not compare in this wa
models, you will usually need to strike a balance between a model
with too few parameters (which will not take account of factors that
have a substantial impact on the data, and will therefore not be
sensitive enough) and one with too many parameters (whi
the model is poor then the value of LM will be much smaller than the
value of LS and the likelihood ratio statistic will be large. Alternatively,
we could examine the natural log of the likelihood ratio statistic: log L
L l l S M = S M where l L S = S log
by yi , and so the second term disappears. Thus, the scaled deviance
(twice the difference between the values of the log-likelihood under
the current and saturated models) is i n yi i = 1 2 2 ( ) where i
is the fitted value for the current model. The devi
1 0.8542 e - - =+ = So the model predicts an 85% probability of passing
for a student in this situation. So in this particular situation, the linear
predictor is h =+ + ab b i 1 2 N S and the link function is log(1 ) m m h = . Question 10.8 Using the mode
[Total 15] CT6-10: Generalised linear models Page 37 The Actuarial
Education Company IFE: 2010 Examinations Chapter 10 Summary
There is a wide variety of distributions that have a common form,
called the exponential family. If the distribution of Y is a m
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Importance of Water in Our Bodies
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Name:
Instructor:
Date:
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Importance of Water in Our Bodies
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Our bodies can last for weeks without food, but only days without water- the body cons
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Marketing and Its Benefits
Institution Affiliation:
Name:
Instructor:
Date:
Marketing and Its Benefits
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Defining Marketing
Marketing involves the activities of a company associated with the purchase and selling
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Loyalty Management and Cause Management
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Loyalty Management
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Minerals and Vitamins
Institution Affiliation:
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Minerals and Vitamins
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Mineral and vitamins are vital nutrients because they perform numerous roles in our body.
Therefore, I have learnt that ev
Running Head: The Rich-Poor Pay Gap Is Getting Wider
The Rich-Poor Pay Gap Is Getting Wider
Institution Affiliation:
Name:
Instructor:
Date:
1
The Rich-Poor Pay Gap Is Getting Wider
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The top wage earners in the previous year earned 5.05 times what the lo