Help again!! - Practice paper 1 - Q.1.4 - (D)

vic1989
vic1989 Registered Posts: 4
in Management Accounting: Decisions and Control
Hi,

Please can someone explain the below and how the answer is worked out! thanks in advance....

The retail shop's delivery costs vary in linear manner and can be expressed using the regression equation
y = a + bx, where x = number of units delivered

The total delivery costs for 200 units and 2,000 units are £5,000 and £14,000 respectively

Calculate the values of a and b
Value of a: 4,000
Value of B: 5

I cant figure this one out....

Comments

  • mergen
    mergen Registered Posts: 112 New contributor 🐸
    Use High-Low method.
  • Sineadp
    Sineadp Registered Posts: 67
    High-Low

    2000-200 = 1800
    14000-5000=9000

    9000/1800=5.00(B)

    200*5.00= 1000
    5000-1000=4000 (A)

    OR

    2000*5.00= 10,000
    14,000-10,000=4000 (A)

    A=4000
    B= 5.00

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