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Mathematics, 13.03.2020 03:29 Okeh4001
Budget Analysis II: A budget is an expression of management's expectations and goals concerning future revenues and costs. To increase their effectiveness, many budgets are flexible, including allowances for the effect of variation in uncontrolled variables. For example, the costs and revenues of many production plants are greatly affected by the number of units produced by the plant during the budget period, and this may be beyond a plant manager's control. Standard cost-accounting procedures can be used to adjust the direct-cost parts of the budget for the level of production, but it is often more difficult to handle overhead. In many cases, statistical methods are used to predict or forecast overhead (y) from the level of production (x) using historical data.
Production unit (in 10,000) 5 6 7 8 9 10 11
overhead cost (in $10,000) 12 11.5 14 15 15.4 15.3 17.5
Construct scettplot of y(x).
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