The Accounting Review Vol. 38 No. 3 1963
COST FINDING THROUGH MULTIPLE CORRELATION ANALYSIS.
Abstract
Multiple correlation analysis will not seriously compete with established costing practices, but under some circumstances will prove useful for developing cost estimates not determinable by other means. This article presents a simple example in order to give accountants a glimpse of the technique and to enable them to recognize potential applications. Consultation with a statistician or a good textbook is urged. Statistical analysts have long been acquainted with multiple correlation, but few accountants recognize it as a device for estimating unit costs. If total dollar costs for a number of time periods are known, along with quantity information about the various items which are related to the total cost, then multiple correlation analysis can furnish individual unit costs. The simplified illustration in this article is followed by a brief discussion of the circumstances under which the technique may be useful, as well as by a description of the analytical process itself. Multiple correlation analysis can furnish useful unit cost estimates only if certain prerequisites are available.
- DOI
- 10.2308/tar-7104452
- Volume
- 38
- Issue
- 3
- Pages
- 540-547
- Language
- en
- Sources
- openalex crossref