Concept introduction:
Scatter-graph- Scatter-graph is the visual representation of the data on the graph with total costs on the y-axis and level of activity in the x-axis.
Least-square regression- Least square regression method use all the available data to derive the best fitting line which minimizes the sum of squared errors between the data points and the regression line.
High-low method:
High-low method uses the most extreme values to determine the variable and fixed cost based on given trends.
Requirement 1
To prepare:
The scatter-graph and draw the best fitting line
Concept introduction:
Scatter-graph- Scatter-graph is the visual representation of the data on the graph with total costs on the y-axis and level of activity in the x-axis.
Least-square regression- Least square regression method use all the available data to derive the best fitting line which minimizes the sum of squared errors between the data points and the regression line.
High-low method:
High-low method uses the most extreme values to determine the variable and fixed cost based on given trends.
Requirement 2
To provide
The estimated fixed costs.
Concept introduction:
Scatter-graph- Scatter-graph is the visual representation of the data on the graph with total costs on the y-axis and level of activity in the x-axis.
Least-square regression- Least square regression method use all the available data to derive the best fitting line which minimizes the sum of squared errors between the data points and the regression line.
High-low method:
High-low method uses the most extreme values to determine the variable and fixed cost based on given trends.
Requirement 3
To compute
Thefixed and variable costs the high low method.
Concept introduction:
Scatter-graph- Scatter-graph is the visual representation of the data on the graph with total costs on the y-axis and level of activity in the x-axis.
Least-square regression- Least square regression method use all the available data to derive the best fitting line which minimizes the sum of squared errors between the data points and the regression line.
High-low method:
High-low method uses the most extreme values to determine the variable and fixed cost based on given trends.
Requirement 4
To perform
The least square regression analysis on Odessa’s data.
Concept introduction:
Scatter-graph- Scatter-graph is the visual representation of the data on the graph with total costs on the y-axis and level of activity in the x-axis.
Least-square regression- Least square regression method use all the available data to derive the best fitting line which minimizes the sum of squared errors between the data points and the regression line.
High-low method:
High-low method uses the most extreme values to determine the variable and fixed cost based on given trends.
Requirement 5
The linear cost equation.
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Chapter 5 Solutions
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