If There Is Evidence of Serial Correlation, Then FGLS Is

question 12

True/False

If there is evidence of serial correlation, then FGLS is preferred over OLS because the FGLS estimator is unbiased.

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Definitions:

Overhead Rate

A calculation used to allocate indirect costs to products or services, typically expressed as a rate per unit of activity (e.g., labor hours or machine hours).

Standard Cost System

A cost accounting system that assigns fixed costs for materials, labor, and overhead to products, allowing for variance analysis.

Actual Results

The actual outcomes or figures achieved, compared against forecasts or budgeted amounts.

Raw Materials Price Variance

The difference between the actual cost and the standard cost of raw materials used in production, reflecting price fluctuations.