Illustrative Transactions and Financial Statements Answers Essay

Identify potential problems with regression data. 7. Evaluate the advantages and disadvantages of alternative cost estimates. 8. (Appendix A) Use Microsoft Excel to perform a regression analysis. 9. (Appendix B) Understand the mathematical relationship describing the learning phenomenon. Why Estimate Costs? Managers make decisions and need to compare costs and benefits among alternative actions. Good decision requires good information about costs, the better these estimates, the better the decision managers will make (Lanen, 2008).. Key Question What adds value to the firm?Good decisions. You saw in Chapters 3 and 4 that good decisions require good information about costs. Cost estimates are important elements in helping managers make decisions that add value to the company (Lanen, 2008). Learning Objective One: Understand the reasons for estimating fixed and variable costs The reasons for estimating fixed and variable costs The basic idea in cost estimation is to estimate the relation between costs and the variables affecting costs, the cost drivers.