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

Determine abc system and service organizations, ABC System and service orga...

ABC System and service organizations The ABC system has been taken up as applied to a manufacturing organizations with the same efficiency. One basic characteristic of service

What is activity ratio, What is Activity ratio Funds are invested in se...

What is Activity ratio Funds are invested in several assets in business to make sales and earn profits. The efficiency with which assets are managed directly affects the volume

Explain the terms - maintenance and improvement, Explain the terms - mainte...

Explain the terms - maintenance and improvement Maintenance ; under the maintenance function, the management must first establish policies rules directives and standard operat

How will you develop its presentation to appropriate markets, we want to re...

we want to realize our job dreams, we need to think about ourselves as products to be marketed, and in order to do this, we need to contextualize ourselves within the five Ps of ma

Activity based costing, Activity Based Costing (ABC) differs from Absorptio...

Activity Based Costing (ABC) differs from Absorption Costing (AC) in the manner in which overheads are charged to units. ABC charges overheads to units based on their proportion

Algebraic analysis, ALGEBRAIC ANALYSIS The supposition of linear cost b...

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

The role of computers in simulation, The Role of Computers in Simulation ...

The Role of Computers in Simulation Computers can be used to: 1) To generate the random numbers 2) To simulate thousands of trials. This is done extremely fast, accuratel

Willco Inc. manufactures electronic parts, Willco Inc. manufactures electro...

Willco Inc. manufactures electronic parts. They are analyzing their monthly maintenance costs to determine the best way to budget these costs in the future. They have collected the

Balanced score card, Balanced Score Card This is a popular approach in ...

Balanced Score Card This is a popular approach in current management thinking which consists of a variety of indicators both financial and non-financial. The balanced scorecard

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