B4-M1

Question 1

Regression analysis

Answer 1

• predicts the value of a dependent variable corresponding to given independent variables
• most accurate method

Question 2

Simple lineal regression model

Answer 2

y=a+Bx
y-dependent variable (total costs)
a-y axis intercept (total fixed costs)
B-slope of line (variable cost per unit)
x-independent variable(units/output)

Question 3

Coefficient of Correlation (r)

Answer 3

-measures the strength of the linear relationship

Question 4

Coefficient of Determination (R^2)

Answer 4

• proportion of total variation in the dependent variable explained by the independent variable
• extent that change in independent variable explains change in dependent variable
• higher=greater fit of regression line

Question 5

High-Low method

Answer 5

• used to estimate the fixed and variable portions of cost
  1. find high and low volumes (ignoring outliers)
  2. Divide difference btw high and low $ total costs by difference in high and low volumes= variable cost per unit

Question 6

Intercept value

Answer 6

Y (dependent) value when X(independent)=0

Y=a

Question 7

Learning curve

Answer 7

-As cumulative production doubles, cumulative avg time per unit falls by a fixed % (learning curve rate)
=hours*learning curve %

Question 8

Probability (Risk/Forecasting) analysis

Answer 8

-Extension of sensitivity analysis