Regression equation

Options
SJaneT
SJaneT Registered Posts: 2
in Management Accounting: Decisions and Control
Hi - can anyone help me in words of one please how I would calculate the values of a & b - I'm practising for MADC exam & this was in AAT practice assessment 1 task 4 - here's the question:

The retail shop delivery costs vary in a linear manner and can be expressed using the regression equation y=a+bx where x = number of units delivered.
Delivery costs for 200 and 2000 units are £5000 and £14000 respectively.
Calculate value of a and b

Well - the answer is a = 4000 and b = 5 - but how on earth would I work that out please?

Really hoping someone can help explain this to me - thanks

Comments

  • Pian32
    Pian32 Registered Posts: 474 Dedicated contributor 🦉
    Options
    So if we had a graph b is your gradient and a would be your intercept.

    We can calculate b first:
    (14000-5000) / (2000/200) = 9000/1800 = 5

    Then from here substitute your value of b into any of the expressions.

    5000 = a + 5 * 200
    a = 5000 - 1000
    a = 4000

    Hope this helps
    AAT Level 4, MAAT
    ACCA in progress
    F4- Passed Aug 2020
    F5- Passed Dec 2020
    F6- Passed Sep 2020
    F7- Passed June 2021
    F8 - Passed Sep 2021
    F9 - Passed June 2021

    SBL -
    SBR - Passed Mar 22
    ATX - Passed Dec 21
    APM - Passed June 22

Categories

Privacy Policy