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The Relation of Cost to Output for a Leather Belt Shop



Methods of Analysis This PDF is a selection from an out-of-print volume from the National Bureau of Economic Research Volume Title: The Relation of Cost to Output for a Leather Belt Shop Volume Author/Editor: Joel Dean Volume Publisher: NBER Volume ISBN: 0-87014-447-2 Volume URL: Publication Date: 1941 Chapter Title: Methods of Analysis Chapter Author: Joel Dean Chapter URL: Chapter pages in book: (p. 18 - 24) because of changes in annual rates which were again unrelated to monthly changes in output or other operating conditions.2' Un red i/led errors Several elements of cost were left wholly or partly unrectified, even though their magnitudes were influenced by some irrelevant variation. The small relative importance of the cost of dies and rings and the difficulty involved in rectification justified the omission of any correc- tion for this cost. Fluctuations in the cost of supplies arising from price changes were ignored both because of the minor importance of the cost and because of the labor involved in correcting for the great diversity of products recorded in the supplies account. The book figures for water, heat, light, and power were also used. The water, heat, and light data did not appear to need correction, and only a small part of the variation in power cost could be considered irrele- Tant. It might have been desirable to remove the fluctuations in the cost of power caused by changes in temperature and number of hours of day- light in different periods, but the complexity of any suitable corrective device indicated that attempts at rectification would not be worth the trouble.22 5 Methods of Analysis Selection of Technique Multiple regression analysis seemed most suitable for investigating the relation of the rectified cost to output and the other operating variables.23 This approach yields measures of: (i) The relation ofcost to each mdc- penclent variable that influences

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