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Students feel burdened when they are assigned homework on such topics that are not really familiar to them. Considering accounting for instance, can be really challenging for those who pursue no interest in the same. Well, it is fair enough if you are looking for cost of prediction error homework help. Let’s talk about the topic in detail:
What is cost of prediction error?
It is defined as the cost which is related to the failure of predicting a particular variable like sales, cash flow or even earning of an employee. If you need some cost of prediction error homework help, you can understand the concept with an example.
Example of cost of prediction error
So let’s say you predict the sales of a particular product in a company, let’s handbags. Let’s say, the fixed cost associated with the same is $300 and the variable cost of the same is of $0.70 for $1, which means the contribution is$0.30 for each handbag. So let’s say you predict the sales of the month as 1200 units. But the actual sales were notified to be 900 units due to competitive corporates in the market. So basically, the prediction of sales was wrong.
How to calculate cost of prediction error?
In order to receive appropriate cost of prediction error assignment help, it is vital to understand the topic with an example and the calculations associated with the same. Because it just makes it simple and easier to understand! Considering the same example:
Prediction of sale: 1200 units
Optimal decision: Buying 1200 units of handbags
Predicted net income: (1200X0.30) – 200= $160
Actual sales: 900 units
Actual net income: (900X0.30) – 200= $70
So the cost of prediction of error here will subtract the actual net income from the predicted net income which is: 160 – 70= $90.
Whether to act on the prediction error or not?
This question is pretty challenging for the corporate. Coat of prediction error is a common term realized in the figures of any corporate but whether to act on the same is the question here. As a student, you must understand that looking for cost of prediction error homework help; this topic is bit sensitive which requires a proper research about the corporate.
If the figure of prediction error is small, the act on prediction is not necessary. But if the difference in the actual and prediction error is in millions, well you have a huge problem coming up!
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