A manager is trying to estimate the manufacturing costs of a new product. The company makes...

A manager is trying to estimate the manufacturing costs of a new product. The company makes several other products that utilize some of the same manufacturing procedures as the new product. Which cost estimation method would be the best method to determine the total cost of manufacturing the new product?

A.	Engineering estimates.

B.	Regression analysis.

C.	Account analysis.

D.	Scattergraph.

Solutions

Expert Solution

A. Engineering Estimates

Explanation :- By summing detailed calculations done at lower levels of the Job Breakdown Structure, the Engineering Cost Estimation approach constructs the total cost estimate. It is a strategy in which the expense of the Project is broken down into lower-level parts, each of which costs direct labour, direct material, and other costs separately. Engineering forecasts for direct working hours may be focused on engineering drawing analyses and guidelines for contractors or industry-wide standards.

Regression Analysis is a group of statistical techniques used to approximate the relationships between one or more independent variables and a dependent variable.

The method of account analysis is a method of cost accounting to measure the various costs associated with project. When a fast cost forecast is needed, the method of account analysis is easy to use and useful. It does, however, believe that what happened in the past will be mirrored in the future.

The scattergraph (or scatter graph) approach is a visual tool used in cost accounting to forecast and budget for potential costs in order to distinguish the fixed and variable elements of a semi-variable expense.

ekkarill92 answered 1 year ago

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