Stochastic Estimation of the Raw Materials Cost and the Determination of The Mean-Expected Total Product Cost : Analysis and Application
AbstractThe present paper offers an alternative way of estimating the mean expected cost of raw materials so as to improve the estimation of the expected total productcost without expanding beyond the framework of measuring and controlling the efficiency of the business. Apart from the estimation methodology proposed, the paper also focuses on the implications of the variance between expected and actual raw materials cost. In this respect, the paper is potentially interesting for managers because it offers new information that can help their decision making process in three different ways: first, it may help managers to redefine the targets of their business; second, it offers managers the insights that could help them take the required corrective actions; and third, it helps managers to better analyze the raw-materials variances in a way that the prevailing estimated cost is both realistic and effective.
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Bibliographic InfoArticle provided by European Research Studies Journal in its journal European Research Studies Journal.
Volume (Year): IX (2006)
Issue (Month): 3-4 ()
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Web page: http://www.ersj.eu/
Find related papers by JEL classification:
- M4 - Business Administration and Business Economics; Marketing; Accounting - - Accounting
- M49 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - Other
- C69 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Other
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- Trond Bj�rnenak & Falconer Mitchell, 2002. "The development of activity-based costing journal literature, 1987-2000," European Accounting Review, Taylor and Francis Journals, vol. 11(3), pages 481-508.
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