Semi-Variable Costs (part 2) Regression analysis – ACCA Management Accounting (MA)
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What does the variables represent? Maybe this will help me understand why am doing what am doing.
The variables represent whatever it is that you are trying to find a relationship between. In the example in our lecture notes that I work through in the lecture, we are trying to find the relationship between the total cost and the number of units produced. So in this example the variables are the cost and the number of units produced.
Sir, I did the question without rounding off to 100s. The answer came for me is “y = 32840 + 67.9x”.
Is my answer correct or not???
The figure should be 678.57x and not 67.85714 as it is 100 into 6.785714……Please correct me if i am wrong.
sorry for posting again, i understood, as it represents a per unit figure that’s why *1000/100….am i right? sorry again for the confusion.
Yes you are correct 🙂
No is it 100 x 67.75714 / 10
Just want to say thank you for these lectures, they are really helping me right now 🙂
Thank you for your comment 🙂
Was confuse on the X figure, but finally can understand now. Thanks all
Great 🙂
Great lecture sir, and thanks for the logics behind the equations and the graph support while explaining.
Sir, I did not understand why at the end you divided by X, ie in 100s , when infact x was to be multiplied . It was y= a + ‘bx’ not b/x. So it should be 1000 x 100. Instead of 1000/100.
Please explain more clearly this part.
Thanks
Y was written in 1,000’s. X was written in 100’s.
So a was multiplied by 1,000 and b was multiplied by 1,000/100 = 10.
I’m sorry, I don’t get the arithmetic.
one more thing regarding X it was in 00’s ,so shouldn’t X squared be in 0000’s? how do we account for that ?
Later we take the square root.
okay, let me try and help you a little bit. so, here’s the thing.
the equation is y=a+bx right?
In this case, we have taken y as y/1000 because it is in thousands
and x as x/100 because it is hundreds
so technically, in this case, our equation should be: y/1000= a+ b*x/100
taking the 1000 on the right, we get: y= 1000a + 10bx
This is the reason why b is multiplied by 1000 and and x by 10.
hope this helps!
I am trying to understand the arithmetic, if you would be kind enough can you help me understand this? Think of me as someone that isn’t good with based arithmetics
sir , for correcting variable “a” we had to multiply by 1000 , but for b why did we not multiply by 100
sir please explain !!
Y was written in 1,000’s. X was written in 100’s.
So a was multiplied by 1,000 and b was multiplied by 1,000/100 = 10.
I have the same question. Variable B unit cost is in 100’s but it was multiplied by 10 instead of 100?
See my answer above.
sir, but why are we doing that?
I don’t understand, please explain further.
You do not need to do it. I only did it to keep the numbers smaller and so speed up the arithmetic.
Dear sir,I want to know why we use 1000/100?
See the earlier answers above
Hi John – how were you able to work out that a is in 1000s and b is in 10s, without breaking it down like below?
?x is in 100s
?y is in 1000s
?xy is in 100,000s
?x ?y is in 100,000s
?x^2 is in 10,000s
(?x)^2 in 10,000s.
Therefore, in the equation for b, the numerator is in 100,000s and the denominator is in 10,000s. Therefore, b is in 10s.
Therefore, in the equation for a, the numerator is in 1000s and the denominator is in 1s. Therefore, a is in 1000s.
I don’t understand how the conclusions can be reached without doing something like that.
Many thanks,
Ronan
I just can’t see how b came to be negative for the formula to be changed from y=a + bx to
y = a – bx.
I should have written + and not –
Sorry 🙁
It is typed correctly in the answers printed in the free lecture notes.
Noted. Thanks Sir Moffat.
Thank you so much sir! Bt l hv a question though… The formula says y= a+bx bt on the example in the lecture you subtracted, like the formula changed to y=a- bx. Would you mind to explain why?
I was about to post on the last part of the equation but John has answered it, thank you.
We are pleased you found it 🙂
What is the Interpolation and extrapolation?
Interpolation is forecasting within the range of the observations. Extrapolation is forecasting outside the range of the observations.
Thank you John!
You are welcome 🙂
In the 15″56,I suppose it should be y=a+bx,but it’s y=32.8572-6.7857x,is it right?
Sorry – it should be a plus and not a minus!!
I must re-record it (but the printed answer in the lecture notes is correct 🙂 )
The figure should be 678.57x and not 67.85714 as it is 100 into 6.785714……Please correct me if i am wrong.
Looks like its not been rerecorded since, as the ‘minus’ is still there.