ACC 310F Chapter Notes - Chapter 2: Regression Analysis, Squared Deviations From The Mean, Yogurt
Document Summary
Using regression analysis that best fits the data. The regression method uses all available observations, to come up with a line. Regression analysis is a statistical method for estimating fixed and variable costs. This methods results in least error between the estimated line and the true total cost line. Con: it makes a number of assumptions about the data, and accounting data sometimes does not satisfy these assumptions. Ex. people may think that expenditures on equipment maintenance are consistent throughout the year, however firms usually scheduled maintenance after periods of heavy usage (which varies) Con: this method assumes that the relation between total cost and the activity volume is linear. Pro: regression analysis is quantitative, objective, and less time consuming. Regression draws the best possible line through a group of data. Estimated intercept is where line meets y-axis (,359 monthly, ,308 yearly) Estimated variable cost increase in cost of each record sold (. 82)
