Question

Pl explain in 150 words--

Which of the following is true about the hypothesis test of cost parameters? a) It indicates whether the parameters are different from zero. b) It provides a range of values instead of a single prediction. c) It measures the degree of association between cost and activity output. d) It shows the difference between predicted and actual costs.

Answer 1

HYPOTHESIS TEST OF COST PARAMETERS INDICATES WHETHER THE PARAMETERS ARE DIFFERENT FROM ZERO.

THAT IS FIRST OPTION IS TRUE (A)

NOW LETS EXPLAIN ABOUT HYPOTHESIS TEST OF COST PARAMETERS.

HYPOTHESIS TESTING IS A FORM OF INFERENTIAL STATISTICS THAT ALLOWS US TO MAKE CONCLUSIONS OF COST BASED ON REPRESENTATIVE SAMPLES. IT PLAYS A VITAL ROLE IN COST BENEFIT ANALYSIS OF AN ORGANIZATION .

IN THE CASE OF A LARGE ORGANIZATION OR SOME ORGANIZATION INVOLVES COMPLEXITY IN ESTIMATING OR ANALISE COST, IN SUCH CASES CERTAIN STATISTICAL HYPOTHESIS ARE USED TO ESTIMATE THE COST PARAMETERS EFFECTIVELY AND EFFICIENTLY

THE MAIN PURPOSE BEHIND STATISTICAL HYPOTHESIS TESTING IS TO DETERMINE WHETHER THERE IS ENOUGH STATISTICAL EVIDENCE IN REGARDS TO CERTAIN PARAMETERS.

IN HYPOTHESIS TESTING THERE ARE TWO ASSUMPTIONS ,ONE IS FAVORED AND OTHER ONE IS ALTERNATIVE. FAVORED HYPOTHESIS IS CALLED NULL HYPOTHESIS AND THE NON FAVORED ONE WHICH IS TERMED AS ALTERNATIVE HYPOTHESIS. NULL HYPOTHESIS IS DENOTED BY H0 AND ALTERNATIVE BY H1 OR HA.

AS IN THE CASE OF COST CONTROL AND DECISION MAKING PROCESS THERE SHOULD BE ASSUMPTION THAT THE PRESENT COST IS UNDER CONTROL AND HELPFUL TO MAKE REASONABLE PROFIT, AND ON THE OTHER SIDE IT IS CONSIDERED THAT THE COST MAY VERY ACCORDING TO THE CHANGES THAT MAY BE MARKET CHANGE OR ELSE. SO THERE EXIST TWO CRITERIA. SO IN THIS SITUATION WE CAN EASILY ADOPT HYPOTHESIS TESTING TO ENSURE CREDIBILITY.

HERE THE PROBABILITY ALPHA VALUES USED COMMONLY ARE 0.05 AND 0.01.

SO IN SUMMARY STATISTICAL MEASURES PROVIDE TRUE AND ACCURATE RESULTS .SO THAT THE ADOPTION OF HYPOTHESIS TEST IS A VERY USEFUL TOOL IN COST MANAGEMENT AND COST CONTROL

THANK YOU