Measuring the Precision of Statistical Cost Allocations |
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Authors: | Roger L. Wright |
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Affiliation: | Graduate School of Business Administration, The University of Michigan , Ann Arbor , Ml , 48109 |
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Abstract: | This article examines the use of regression analysis for allocating indirect costs. When multiple regression is used to estimate the weights of several allocation factors, conventional standard errors and correlation coefficients can be misleading with respect to the statistical precision of the cost allocations. This article develops alternative allocation approaches and measures of precision that use linear prediction theory and Bayesian inference. The proposed methods are illustrated using a university indirect cost study. |
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Keywords: | Bayesian inference Generalized linear model Joint costs BLU prediction Cost estimation Utility costs |
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