# Projection and Forecasting Techniques (B4:M1-2) Flashcards

1
Q

what is the coefficient of determination (R squared)?

A

% of variation in the dependent variable (y) explained by the variation in the independent variables (x)

*value between 0 and 1. higher is better because better “fit”

2
Q

what is the difference between simple regression and multiple regression?

A

simple: one independent variable (x)
multiple: more than one independent variable (x)

3
Q

what is the difference between independent (x) and dependent variable (y)?

A

x: it explains the dependent variable (y)
y: this is the variable that we are trying to explain

4
Q

flexible budget formula

A

total cost = FC + (VC per unit x number of units)

5
Q

in a regression equation, which variable is estimated?

A

the dependent (y)

6
Q

simple regression formula

A

y = a + Bx

y: dependent variable (e.g., total cost)
a: y intercept of regression line (e.g., fixed cost)

B: slope of regression line (e.g., variable cost per unit)

x: independent variable (e.g., output)

7
Q

in order to use the flexible budget formula, you must know what the variable cost per unit is. How do you determine that?

A

by using the high-low method.

highest cost - lowest) / (highest volume - lowest

8
Q

what is the premise of the learning curve?

A

efficiency/production increases as experience is gained

9
Q

what is the difference between absorption costing and direct (variable) costing?

A

a: charges DM, DL, VO, and FO to inventoriable costs (required for external reporting)
d: same as absorption, but excludes FO from inventoriable costs (i.e., expenses FO as period cost)

10
Q

breakeven point in units = ?

A

total fixed costs / contribution margin per unit

11
Q

which costing method actually encourages larger inventories?

A

absorption

12
Q

what is cost-based pricing associated with? (3 things)

A

price stability

price justification

fixed-cost recovery

13
Q

contribution margin = ?

A

revenue - variable costs (DM, DL, VO, shipping and packing, variable selling expenses)

14
Q

margin of safety = ?

A

total sales - breakeven sales

15
Q

break even point in dollars = ?

A

total fixed cost / contribution margin ratio*

*contribution margin / sales

or

break even units x sales price per unit