Chapter 6 - forecasting

Question 1

What are the steps of the high - low method?

Answer 1

1. Select the highest and lowest activity levels and identify their associated costs.
2. Find the variable cost per unit.
3. Find the total fixed cost

Question 2

How can the straght line equation be used for costing

Answer 2

y = a + bx

• a = Fixed cost per period (y intercept)
• b = Variable cost per unit (gradient)
• x = activity level
• y = total cost (a+b)

Question 3

If the correlation of to variables on a graph is no obvious how will the correlation coefficient (r) help to determine the correlation?

Answer 3

• r = +1 → a perfect posstivie correlation
• r = 0 → no correlation
• r = -1 → a perfect negative correlation

Question 4

What is the coefficient of deterination?

Answer 4

r²

• If r = 0.98, r² = 0.96 or 96%.
• This means that 96% of the variance in y is explained by variations in x
• The other 4% is due to random fluctations or other factors not identified in the 2 varaibles.

Question 5

1. What is data analysis
2. What is data mining?

Answer 5

1. The pocess of collecting, organising and analysing large sets of data to generate trends to aid decision making
2. The process of sorting through data to identiy patterns and relationships betwen different items.

Question 6

What is ‘Big data’?

Answer 6

Extremely large data sets that may be analysed computationally to reveal patterns & trends → especially relating to human behaviour and interactions.

Question 7

Whats are the advantages and disadvanatges of big data?

Answer 7

Question 8

1. What is a non - participative _{(top down)} budget?
2. What is a participative _{<em>(bottem up)</em>} budget?

Answer 8

Question 9

What is a…

1. Continous/rolling budget?
2. Incremental budget?
3. Zero - based budget?

Answer 9

1. Budgets set a year in advance and updated regularly.
2. A budget using the previous years figures as a starting point adding increments as necessary (e.g. inflation)
3. Its starts the budgeting process form 0 as it does not take anything for granted.

Question 10

What are…

1. Product based budgets?
2. Reposnsibility based budgets?
3. Activitiy based budgets?

Answer 10