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Choose the relationship which best predicts the dependent variable
After exploring a diversity of relationships, you should select the one that can best be employed in predicting the dependent variable. Generally, this will be the relationship which best predicts the values of the dependent variable. The high correlation (relationship) among a potential independent variable and the dependent variable frequently indicates that the independent variable will be a good predictive tool. Though, you should reassure that the value of the independent variable is accessible in order for you to make timely estimates. When it is not, you might require considering other alternatives.
There are different techniques which can be used to estimate the cost function. Examples comprise: • Engineering technique• Account analysis• Regression analysis• High low technique• Time series analysis• Simulation analysis
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ALGEBRAIC ANALYSIS The supposition of linear cost behavior allows use of straight-line graphs and simple linear algebra in cost-volume study. The net cost is a semi-variable c
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Steps of Graphic Analysis There are four steps in using graph paper to study cost-volume relationships: Step 1: Compute the scale which you will use: Volume is considered
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