for accountsguru

Her eyou go…. I need it within 2 days. Enough time…Yeah?

  

6. Regression analysis

Let

X

be the cups of coffee sold

And

Y

be the utility expenses

9300

86490000

460

Month	X	Y	X2	XY
Jan.		9300	472		864 9000 0	4389 600
Feb.	9800	510	96040000	4998000
March	10850	524	117722500	5685400
April	9500		460	90250000	4370000
May	440	4092000
June	9000	81000000	4140000
July	8800	452	7 7440000	3977600
Aug.	8600	430	73960000	3698000
Sept.	11000	535	121000000	5885000
Oct.	11620	570	135024400	6623400
Nov.	12000	580	144000000	6960000
Dec.	12400	600	153760000	7440000
Total	122170	6033	1263176900	62259000

The regression line is

Y = a + bX

Where a= fixed cost

b= variable cost per cup

b =

= 0.04

a = – b

= 62.61

Y= 62.61 + 0.04X

Fixed cost = 62.61

Variable cost per cup = 0.04

High – Low method

Sales revenue Utility expenses

High 12400 600

Low 8600 430

Difference 3800 170

Variable cost per cup = 3800/170

= 0.04

Fixed cost = 600 – 12400(Variable cost per cup)

= 45.26

7. Regression method is most appropriate as compare to high low method because it based on all the figures of the data. As shown in above calculation variable cost is almost same but fixed cost is different because high low method based on only extreme values not as a whole.