Correlation coefficient, Managerial Accounting

Assignment Help:

Correlation coefficient (r)

Correlation coefficient measures the degree of association between two variables such as the cost and the activity level.

r = nΣxy   -  Σx  Σy
     [nΣx2 – (Σx)2 ] [nΣy2  - (Σy)2]


When the degree of association among the two variables is very close then it would be almost possible to plot the observation on a straight line and r will be almost equal to one.

-1≤ r ≤ 1

If r= -1, then the two variables are said to be perfectly negatively correlated
If r = +1, then the two variables are perfectly positively correlated
If r = 0, then there is no correlation between the two variables.


Related Discussions:- Correlation coefficient

What are the advantages of standard costing, Advantages of standard costing...

Advantages of standard costing 1) Measuring efficiency: standard costing is a yardstick for measuring efficiency. The comparison of actual costs with standard costs enables t

Strengths and weakness of net book value and paybac, Strengths and weaknes...

Strengths and weakness of net book value and pay back method

Accounting information system, I have 20pages preparing a system flowchart ...

I have 20pages preparing a system flowchart assignment

The basic eoq model-the deterministic models, THE BASIC EOQ MODEL This ...

THE BASIC EOQ MODEL This is the most simple of all the models discussed. In addition to the general assumptions which relate to all deterministic models (i.e. certainty of all

Full service non recourse, Full Service Non Recourse: in this method the b...

Full Service Non Recourse: in this method the book debts are purchased through the factor assuming 100 percent credit risk. In case of default through the debtor the whole risk is

Compute the operating cycle, Under this method, approximation is made of pa...

Under this method, approximation is made of payments and cash receipts in the ensuring period. The dissimilarity of these payments and receipts indicates deficiency or surplus of c

What potential ethics issues, Scenario - Ahi Corporation is one of your cli...

Scenario - Ahi Corporation is one of your clients in Hawaii. The company had a good year last year and owes the IRS $100,000,000, due on March 15. There are no penalties or interes

Queuing problems, Queuing problems There are two main approaches to que...

Queuing problems There are two main approaches to queuing problems: •    simulation •    queuing theory formula Where simple situations apply, queuing theory should be used

What are the features of product life cycle costing, Features of product li...

Features of product life cycle costing Product life cycle costing is important due to the following features: 1) product life cycle costing involves tracing of costs and re

Job order costing, a cost-allocation base may be any of the following excep...

a cost-allocation base may be any of the following except: a. cost driver b. cost pool c. way to link indirect cost to a cost object d. nonfinancial quantity

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd