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Unformatted text preview: formula you developed) Regression Analysis • Statistically fit line based on all data points • Use a spreadsheet package to o Develop a cost o Determine if the variability in the dependant variable is explained by the variability in the independent variable Example • R squared = coefficient of determination = goodness of fit • Intercept = “b” = fixed cost • X Variable 1 = slope Managerial Judgment • To calculate the independent variable, managers make an educated guess High Low Method • Advantage o Objective o Quick • Disadvantages o Possible that high and low points are outliers Regression Analysis • Advantages o Accurate • Disadvantages o Interpretation of output requires a greater amount of knowledge Managerial Judgment • Advantages o People bring knowledge that spreadsheets can’t supply • Disadvantage o Need experience, knowledgeable people making the judgment calls...
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 Spring '08
 FARMER
 Accounting, per/unit basis

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