Multiple regression, Managerial Accounting

Assignment Help:

MULTIPLE REGRESSION

The least square regression equation discussed above was based on the assumption that total cost was determined by only one activity based variable. However, other variables are likely to affect labour costs such as labour hours, material costs, machine hours, etc. These may have an effect on labour costs.

The equation for the simple regression can be expanded to include more than one independent variable as shown below:

Y = a + b1X1 + b2 X2 + b3 X3 +………+bn Xn

For two independent variables, the function will be of the form:

Y = a + b1X1 + b2 X2

The normal equations can be given by:
∑y      = na + b1 ∑X1 + b2∑x2
∑X1Y  = a∑x1 + b1∑X12 + b2 ∑X1 ∑X2
∑X2 Y = a∑x2 + b1∑  X 1∑X2 +b2 ∑X2 

Normally computers are used for the solution of multiple regression.


Related Discussions:- Multiple regression

Cost behavior, Echeverria SA is an Argentinian manufacturing company whose ...

Echeverria SA is an Argentinian manufacturing company whose total factory overhead costs fluctuate somewhat from year to year according to the number of machine-hours worked in its

Cost, Stellar Packaging Products and its primary customer, Estrella Coffee,...

Stellar Packaging Products and its primary customer, Estrella Coffee, are deciding on appropriate costing systems for their operations. Stellar Packaging Products’ manufacturing is

What are the main limitations of breakeven charts, QUESTION 1: Part A ...

QUESTION 1: Part A What are the main components of a set of Financial Statements and what are their respective purposes? Part B Trial balances of Hans Ltd on 30 Ju

Relevant Cost, Outline Five characteristics of relevant cost

Outline Five characteristics of relevant cost

Explain about customer oriented pricing, Customer oriented or perceived val...

Customer oriented or perceived value pricing There is an increasing trend to price the product on the basis of the customer's perception of its value. This method takes into ac

Activity based costing, Activity Based Costing (ABC) differs from Absorptio...

Activity Based Costing (ABC) differs from Absorption Costing (AC) in the manner in which overheads are charged to units. ABC charges overheads to units based on their proportion

Transfer pricing with third party consequences, Transfer pricing with third...

Transfer pricing with third party consequences Transfer prices are used not only for internal record keeping and performance evaluation purposes. There are several settings

What is ratio analysis, Ratio analysis A ratio is a simple arithmetical...

Ratio analysis A ratio is a simple arithmetical expression of the relationship of one number to another. It may be explained as the indicated quotient of two mathematical ex

Chapter 3, Cretin Enterprises uses a predetermined overhead rate of $21.40 ...

Cretin Enterprises uses a predetermined overhead rate of $21.40 per direct labor-hour. This predetermined rate was based on a cost formula that estimated $171,200 of total manufact

Case of variable quantity-discounts structures, The case of variable quanti...

The case of variable quantity discounts In practice, suppliers may offer different discounts for different quantities purchased. For illustration:    Segment        Quantity

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd