Practice Assessment 2 Q1.5 (b)
mcd
Registered Posts: 9 New contributor 🐸
Production costs for product are semi variable. Company uses regression formula y=a + bx to forecast costs where:
y=total costs
x=units
a=fixed element
b=variable element
Data has been gathered on previous costs:
Units Total Cost
(x) (y)
8000 52000
12000 72000
13500 79500
Using the data provided and the regression formula calculate the values of a and b?
Can anyone help on this can't seem to arrive at the correct answer?
Thanks
Mike
y=total costs
x=units
a=fixed element
b=variable element
Data has been gathered on previous costs:
Units Total Cost
(x) (y)
8000 52000
12000 72000
13500 79500
Using the data provided and the regression formula calculate the values of a and b?
Can anyone help on this can't seem to arrive at the correct answer?
Thanks
Mike
0
Comments

I think its like High Low where you subtract one set of x and y from the other to work out the variable b and from this you can get the fixed a
y = a + bx
(72000 52000) = (aa) + (12000b  8000b)
20000 = 4000b
therefore b = 5
79500 = a + (5 x 13500)
79500 = a + 67500
therefore a = 120002 
Great, thank you for your help!0
Categories
 All Categories
 1.2K Books to buy and sell
 2.3K General discussion
 12.5K For AAT students
 319 NEW! Qualifications 2022
 162 General Qualifications 2022 discussion
 11 AAT Level 2 Certificate in Accounting
 56 AAT Level 3 Diploma in Accounting
 87 AAT Level 4 Diploma in Professional Accounting
 8.8K For accounting professionals
 23 coronavirus (Covid19)
 272 VAT
 92 Software
 273 Tax
 135 Bookkeeping
 7.2K General accounting discussion
 200 AAT member discussion
 3.8K For everyone
 38 AAT news and announcements
 345 Feedback for AAT
 2.8K Chat and offtopic discussion
 582 Job postings
 16 Who can benefit from AAT?
 36 Where can AAT take me?
 42 Getting started with AAT
 26 Finding an AAT training provider
 48 Distance learning and other ways to study AAT
 25 Apprenticeships
 66 AAT membership