管理会计英文讲义 管理会计Session 12 Budgeting.pdf

Session 12 Budgeting Main contents: 1. Forecasting 2. Budgeting 3. Budgetary process 4. Behavioral aspect of budgeting 5. Capital expenditure budgeting 6. Methods of project appraisal 12.1 Forecasting Correlation: two variables are said to be correlated if a change in the value of one variable is accompanied by a change in the value of another variable. This is meant by correlation. Two variables might be perfectly correlated, partly correlated or uncorrelated. - Perfect correlation – linear relationship - Partial correlation - No correlation The correlation coefficient Correlation coefficient r =n ∑XY - ∑X∑Y √（n ∑X2 - （∑X）2）（ （n ∑Y2 - （∑Y）2） The correlation coefficient , r ● R= +1 means that the variables are perfectly positively correlated ● R= -1 means that the variables are perfectly negatively correlated ● R= 0 means that the variables are uncorrelated Example： The cost of output at a factory is thought to depend on the number of units produced. Data have been collected for the number of units produced each month in the last six months, and the associated costs, are as follows. Month Output Cost 000 of units $000 X Y 1 2 9 2 3 11 3 1 49 4 4 13 5 3 11 6 5 15 Required: Assess whether there is any correlating correlation between output and cost? Solution: Correlation coefficient r =n ∑XY - ∑X∑Y √（n ∑X2 - （∑X）2）（ （n ∑Y2 - （∑Y）2） Working: