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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 ≤ 1If r= -1, then the two variables are said to be perfectly negatively correlatedIf r = +1, then the two variables are perfectly positively correlatedIf r = 0, then there is no correlation between the two variables.
Consider the following quality data for three different manufacturers of automobile weather-strips: Weather-strip Bulb Dimension Specification y=20 +or- 4mm
limitation
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Stages in the performance budgeting The stages in the performance budgeting is enumerated as follows: 1) Establishment of goals objectives and policies: data collection revi
State Factors determining Working Capital requirement.
Determine the Scope and areas of cost reduction Scope and areas of cost reduction the scope of cost reduction is so wide that it is not practicable to develop fully the areas i
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if equipment will be depreciated on a straight-line depreciation basis over a five year period with an estimated residual value, what do I do with this information in a investment
It is the most practical way of estimating working capital needs. In such method, the finance manager gets ready a working capital forecast. While preparing such forecast, firstly
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