managerial acc Chap 03

7/23/2019 managerial acc Chap 03

http://slidepdf.com/reader/full/managerial-acc-chap-03 1/67

© 2012 McGraw-Hill Education (Asia)

Cost Behavior: Analysis and Use

Chapter 3



McGraw-Hill Education (Asia) Garrison, Noreen, Brewer, Cheng & YuenMcGraw-Hill/Irwin Slide 2

Learning O!e"tive #

Understand how $i%ed andUnderstand how $i%ed and

variale "osts ehave andvariale "osts ehave and

how to use the to predi"thow to use the to predi"t"osts'"osts'




A variale "ost is a "ost whose total dollaraount varies in dire"t proportion to "hanges

in the a"tivity level'

(ypes o$ Cost Behavior )atterns * +ariale




(he A"tivity Base also "alled a "ost driver-

A easure o$ what"auses the

in"urren"e o$ avariale "ost

Unitsprodu"ed

.ilesdriven

.a"hinehours

Laorhours




.inutes (al/ed

( o

t a l O v e r a g e

C h a r g e

s o n

C e

l l

) h o

n e

B i l l

(rue +ariale Cost * An 0%aple

As an e%aple o$ an a"tivity ase, "onsideroverage "harges on a "ell phone ill' (he a"tivityase is the nuer o$ inutes used aove the

allowed inutes in the "alling plan'




+ariale "osts reain "onstant i$ e%pressed ona per unit asis'

(ypes o$ Cost Behavior )atterns * +ariale


http://slidepdf.com/reader/full/managerial-acc-chap-03 7/67McGraw-Hill Education (Asia) Garrison, Noreen, Brewer, Cheng & YuenMcGraw-Hill/Irwin Slide 7

.inutes (al/ed

) e r

. i n u

t e

O v

e r a g e

C h a r g e

+ariale Cost )er Unit * An 0%aple

1e$erring to the "ell phone e%aple, the "ost peroverage inute is "onstant, $or e%aple 2 "ents per

overage inute'



0%tent o$ +ariale Costs

(he proportion o$ variale "osts differs a"ross organi4ations'5or e%aple ' ' '

A puli" utility li/e 5lorida A puli" utility li/e 5lorida

)ower and Light,)ower and Light,

with large investents inwith large investents ine6uipent, will tend to havee6uipent, will tend to have

fewerfewer variale "osts'variale "osts'

A puli" utility li/e 5lorida A puli" utility li/e 5lorida

)ower and Light,)ower and Light,

with large investents inwith large investents ine6uipent, will tend to havee6uipent, will tend to have

fewerfewer variale "osts'variale "osts'

A anu$a"turing "opany A anu$a"turing "opanyli/e Bla"/ and 7e"/er li/e Bla"/ and 7e"/er

will o$ten havewill o$ten have many many variale "osts'variale "osts'

A anu$a"turing "opany A anu$a"turing "opanyli/e Bla"/ and 7e"/er li/e Bla"/ and 7e"/er

will o$ten havewill o$ten have many many variale "osts'variale "osts'

A er"handising "opany A er"handising "opany

li/e 8al9.artli/e 8al9.artusually has ausually has a highhigh

proportion proportion o$ variale "osts,o$ variale "osts,li/e "ost o$ sales'li/e "ost o$ sales'

A er"handising "opany A er"handising "opany

li/e 8al9.artli/e 8al9.artusually has ausually has a highhigh

proportion proportion o$ variale "osts,o$ variale "osts,li/e "ost o$ sales'li/e "ost o$ sales'

oe servi"e "opaniesoe servi"e "opanieshavehave highhigh variale "osts,variale "osts,

while other servi"ewhile other servi"e

"opanies have"opanies have highhigh

$i%ed "osts'$i%ed "osts'

oe servi"e "opaniesoe servi"e "opanies

havehave highhigh variale "osts,variale "osts,while other servi"ewhile other servi"e

"opanies have"opanies have highhigh




0%aples o$ +ariale Costs

1. Merchandising companies * "ost o$ goods sold'2. Manufacturing companies * dire"t aterials,

dire"t laor, and variale overhead'

3. Merchandising and manufacturing companies *"oissions, shipping "osts, and "leri"al "ostssu"h as invoi"ing'

4. Service companies * supplies, travel, and"leri"al'

1. Merchandising companies * "ost o$ goods sold'2. Manufacturing companies * dire"t aterials,

dire"t laor, and variale overhead'

3. Merchandising and manufacturing companies *"oissions, shipping "osts, and "leri"al "ostssu"h as invoi"ing'

4. Service companies * supplies, travel, and"leri"al'



+olue

C o s

t

(rue +ariale Costs

(he aount o$ a true variale "ost used during theperiod varies in dire"t proportion to the a"tivity level'(he overage "harge on a "ell phone ill was onee%aple o$ a true variale "ost'

7ire"t aterial isanother e%apleo$ a "ost thatehaves in a truevariale pattern'



tep9+ariale Costs

A step-variable cost step-variable cost is a resour"e that is otainale onlyin large "hun/s su"h as aintenan"e wor/ers- andwhose "osts "hange only in response to $airly wide

"hanges in a"tivity'

+olue

C

o s

t



tep9+ariale Costs

all "hanges in the level o$ produ"tion are notli/ely to have any e$$e"t on the nuer o$

aintenan"e wor/ers eployed'

+olue

C o s

t



tep9+ariale Costs

+olue

C o s

t

Only $airly wide "hangesin the a"tivity level will"ause a "hange in the

nuer o$ aintenan"ewor/ers eployed'

Only $airly wide "hangesin the a"tivity level will"ause a "hange in the

nuer o$ aintenan"ewor/ers eployed'



1elevant1ange

A straight line"losely

appro%iates a"urvilinear

variale "ostline within therelevant range'

A straight line"losely

appro%iates a"urvilinear

variale "ostline within therelevant range'

A"tivity

( o

t a l C o s

t

0"onoist;sCurvilinear Cost

5un"tion

(he Linearity Assuption and the 1elevant 1ange

A""ountant;s traight9Line

Appro%iation "onstantunit variale "ost-



A $i%ed "ost is a "ost whose total dollaraount reains "onstant as the a"tivity level

"hanges'

(ypes o$ Cost Behavior )atterns * 5i%ed



Nuer o$ .inutes Usedwithin .onthly )lan

.

o n

t h l y B a s

i "

C e

l l ) h o n e

B i l l

(otal 5i%ed Cost * An 0%aple

5or e%aple, your "ell phone ill proaly in"ludes a$i%ed aount related to the total inutes allowed inyour "alling plan' (he aount does not "hange when

you use ore or less allowed inutes'



Average $i%ed "osts per unit de"rease as thea"tivity level in"reases'

(ypes o$ Cost Behavior )atterns * 5i%ed



Nuer o$ .inutes Usedwithin .onthly )lan

C o s t

) e r

C e

l l ) h o n

e C a

l l

5i%ed Cost )er Unit 0%aple

5or e%aple, the $i%ed "ost per inute usedde"reases as ore allowed inutes are used'



0%aples Advertising and

1esear"h and7evelopent

0%aples7epre"iation on Buildingsand 06uipent and 1eal

0state (a%es

(ypes o$ 5i%ed Costs

7is"retionary

.ay e altered in the

short9ter y "urrentanagerial de"isions

Coitted

Long9ter, "annot e

signi$i"antly redu"ed inthe short ter'



(he (rend (oward 5i%ed Costs

(he trend in any industries is toward greaterfixed costs relative to variale "osts'

As a"hines ta/e over As a"hines ta/e over

any undane tas/sany undane tas/spreviously per$oredpreviously per$ored

y huans,y huans,

<<nowledge worersnowledge worers

==

are deanded $or are deanded $or

their inds rather their inds rather than their us"les'than their us"les'

>nowledge wor/ers>nowledge wor/ers

tend to e salaried,tend to e salaried,highly9trained andhighly9trained and

di$$i"ult to repla"e' (hedi$$i"ult to repla"e' (he

"ost o$ "opensating"ost o$ "opensating

these valued eployeesthese valued eployees

isis relatively fixed relatively fixed

rather than variale'#rather than variale'#



?s Laor a +ariale or a 5i%ed Cost@

(he ehavior o$ wage and salary "osts "an differ

across countries, depending on laor regulations,laor "ontra"ts, and "usto'

?n !rance, "ermany , #hina, and $apan, anageent has

little $le%iility in ad!usting the si4e o$ the laor $or"e'Laor "osts are ore $i%ed in nature'

?n the %nited States and the %nited &ingdom, anageenthas greater latitude' Laor "osts are ore variale in nature'

8ithin "ountries anagers "an view laor "osts di$$erentlydepending upon their strategy' .ost "opanies in the

%nited States "ontinue to view dire"t laor as a variale "ost'



1 e n t

C o s

t i n ( h o

u s a n

d s

o $ 7 o

l l a r s

#, , 3,1ented Area 6uare 5eet-

3

5i%ed Costs and the 1elevant 1ange

D

1elevant

1ange

(he relevant rangeo$ a"tivity $or a $i%ed"ost is the range o$a"tivity over whi"hthe graph o$ the

"ost is $lat'





5i%ed "osts would in"rease5i%ed "osts would in"rease

in a step $ashion at a rate o$in a step $ashion at a rate o$

E3, $or ea"h additionalE3, $or ea"h additional

#, s6uare $eet'#, s6uare $eet'

5or e%aple, assue o$$i"e spa"e is availale at5or e%aple, assue o$$i"e spa"e is availale ata rental rate o$ E3, per year in in"reents o$a rental rate o$ E3, per year in in"reents o$

#, s6uare $eet'#, s6uare $eet'




Fow does thisFow does this

step9$un"tionstep9$un"tionpattern di$$er $ro apattern di$$er $ro astep9variale "ost@step9variale "ost@

tep9variale "osts"an e ad!usted ore6ui"/ly as "onditions

"hange and ' ' '

(he width o$ the a"tivitysteps is u"h wider $or

the $i%ed "ost'





ui"/ Che"/

8hi"h o$ the $ollowing stateents aout"ost ehavior are true@

a' 5i%ed "osts per unit vary with the level o$

a"tivity'' +ariale "osts per unit are "onstant within the

relevant range'

"' (otal $i%ed "osts are "onstant within the relevant

range'd' (otal variale "osts are "onstant within the

relevant range'




8hi"h o$ the $ollowing stateents aout"ost ehavior are true@

a' 5i%ed "osts per unit vary with the level o$

a"tivity'' +ariale "osts per unit are "onstant within the

relevant range'

"' (otal $i%ed "osts are "onstant within the

relevant range'd' (otal variale "osts are "onstant within the

relevant range'

ui"/ Che"/




5i%ed .onthly

Utility Charge

+ariale

Cost per >8

A"tivity >ilowatt Fours-

( o

t a l U

t i l i t y C o s t

H

Y

A i%ed "ost "ontains oth variale and $i%ed

eleents' Consider the e%aple o$ utility "ost'

A i%ed "ost "ontains oth variale and $i%ed

eleents' Consider the e%aple o$ utility "ost'

.i%ed Costs also "alled seivariale "osts-

( o t a l

& i % e

d " o s

t




.i%ed Costs

5i%ed .onthly

Utility Charge

+ariale

Cost per >8

A"tivity >ilowatt Fours-

( o

t a l U

t i l i t y C o s t

X

Y

( o t a l

& i % e

d " o s

t




.i%ed Costs * An 0%aple

?$ your $i%ed onthly utility "harge is E2, your?$ your $i%ed onthly utility "harge is E2, yourvariale "ost is E'3 per /ilowatt hour, and yourvariale "ost is E'3 per /ilowatt hour, and your

onthly a"tivity level is , /ilowatt hours, what isonthly a"tivity level is , /ilowatt hours, what isthe aount o$ your utility ill@the aount o$ your utility ill@

?$ your $i%ed onthly utility "harge is E2, your?$ your $i%ed onthly utility "harge is E2, yourvariale "ost is E'3 per /ilowatt hour, and yourvariale "ost is E'3 per /ilowatt hour, and your

onthly a"tivity level is , /ilowatt hours, what isonthly a"tivity level is , /ilowatt hours, what isthe aount o$ your utility ill@the aount o$ your utility ill@




Analysis o$ .i%ed Costs

?n?n account analysisaccount analysis, ea"h a""ount is, ea"h a""ount is"lassi$ied as either variale or $i%ed ased"lassi$ied as either variale or $i%ed ased

on the analyst;s /nowledge o$ howon the analyst;s /nowledge o$ howthe a""ount ehaves'the a""ount ehaves'

?n?n account analysisaccount analysis, ea"h a""ount is, ea"h a""ount is"lassi$ied as either variale or $i%ed ased"lassi$ied as either variale or $i%ed ased

on the analyst;s /nowledge o$ howon the analyst;s /nowledge o$ howthe a""ount ehaves'the a""ount ehaves'

(he(he engineering approachengineering approach "lassi$ies"lassi$ies

"osts ased upon an industrial"osts ased upon an industrialengineer;s evaluation o$ produ"tionengineer;s evaluation o$ produ"tion

ethods, and aterial, laor andethods, and aterial, laor andoverhead re6uireents'overhead re6uireents'

(he(he engineering approachengineering approach "lassi$ies"lassi$ies

"osts ased upon an industrial"osts ased upon an industrialengineer;s evaluation o$ produ"tionengineer;s evaluation o$ produ"tionethods, and aterial, laor andethods, and aterial, laor and

overhead re6uireents'overhead re6uireents'

A""ount Analysis and the 0ngineering Approa"h A""ount Analysis and the 0ngineering Approa"h A""ount Analysis and the 0ngineering Approa"h A""ount Analysis and the 0ngineering Approa"h




8hy and how to redu"e $i%ed "osts or swit"hthe to variale "osts@

(ypi"al $i%ed "osts: produ"tion $a"ilities, rentals, eployees

salaries and related ene$its and utilities Converting the into variale ay redu"e ris/ o$ $inan"ial "oitent

and provide $le%iility o$ "apa"ity utilisation

Outsourcing

Business with $ast and regular "hange andIor large varieties o$produ"ts ost li/ely will ene$it $ro this approa"h e'g' Ni/e and

Apple Non9"ore usiness $un"tions with lower value9add to a!ority

"ustoers e'g' "all "enters $or en6uiries, 3rd party logisti"s, ro/er9

dealers; se"urities a"/ o$$i"e operations

Offshoring Fonda and (oyota (hailand plants FBC a"/ o$$i"e $un"tions in China




Learning O!e"tive

Use a s"attergraph plot toUse a s"attergraph plot to

diagnose "ost ehavior'diagnose "ost ehavior'




)lot the data points on a graph(otal Cost Y vs' A"tivity X -'

)lot the data points on a graph(otal Cost Y vs' A"tivity X -'

# 3 2

J

. a

i n t e n a n " e

C

o s

t

# , A

A A ; s o

$ 7 o l l a r s

#

JJJ

J JJ JJ

J

)atient9days in #,;s

X

Y

(he "attergraph .ethod





7raw a line through the data points with aout ane6ual nuers o$ points aove and elow the line'7raw a line through the data points with aout ane6ual nuers o$ points aove and elow the line'

# 3 2

J

. a

i n t e n a n " e

C

o s

t

# , A

A A ; s o

$ 7 o l l a r s

#

JJJ

J JJ JJ

J


X

Y





Use one data point to estiate the total level o$ a"tivityand the total "ost'Use one data point to estiate the total level o$ a"tivityand the total "ost'

?nter"ept K 5i%ed "ost: E#,

# 3 2

J

. a

i n t e n a n " e

C

o s

t

# , A

A A ; s o

$ 7 o l l a r s

#

JJJ

J JJ JJ

J


X

Y

)atient days K

(otal aintenan"e "ost K E##,





.a/e a 6ui"/ estiate o$ variale "ost per unit anddeterine the "ost e6uation'.a/e a 6ui"/ estiate o$ variale "ost per unit anddeterine the "ost e6uation'

+ariale "ost per unit K E#,

K E#'Ipatient9day

' ' K E#, M E#'K E#, M E#' ( ( ' ' K E#, M E#'K E#, M E#' ( (

(otal aintenan"e "ost(otal aintenan"e "ost(otal aintenan"e "ost(otal aintenan"e "ost Nuer o$ patient daysNuer o$ patient daysNuer o$ patient daysNuer o$ patient days




Learning O!e"tive 3

Analy4e a i%ed "ost Analy4e a i%ed "ost

using the high9low ethod'using the high9low ethod'




(he Figh9Low .ethod * An 0%aple

Assue the $ollowing hours o$ aintenan"e wor/ and the total aintenan"e "osts $or si% onths'





(he(he variable costvariable cost per hour per hour o$o$

aintenan"e isaintenan"e ise6ual to the "hangee6ual to the "hange

in "ost divided yin "ost divided ythe "hange in hours'the "hange in hours'

(he(he variable costvariable cost per hour per hour o$o$

aintenan"e isaintenan"e ise6ual to the "hangee6ual to the "hange

in "ost divided yin "ost divided ythe "hange in hours'the "hange in hours'

K E'Ihour E'Ihour E,2 2





(otal 5i%ed Cost K (otal Cost * (otal +ariale Cost(otal 5i%ed Cost K (otal Cost * (otal +ariale Cost

(otal 5i%ed Cost K ED, * EIhour(otal 5i%ed Cost K ED, * EIhour hours- hours-

(otal 5i%ed Cost K ED, * E,#(otal 5i%ed Cost K ED, * E,#

(otal 5i%ed Cost K(otal 5i%ed Cost K E2,E2,





' ' K E2, M E' K E2, M E' ( (

(he Cost 06uation $or .aintenan"e




ui"/ Che"/

ales salaries and "oissions are E#, when, units are sold, and E#2, when #,units are sold' Using the high9low ethod, what is thevariale portion o$ sales salaries and "oission@

a' E' per unit

' E'# per unit

"' E'# per unit

d' E'# per unit

ales salaries and "oissions are E#, when, units are sold, and E#2, when #,units are sold' Using the high9low ethod, what is the variale portion o$ sales salaries and "oission@

a' E' per unit

' E'# per unit

"' E'# per unit

d' E'# per unit




ales salaries and "oissions are E#, when, units are sold, and E#2, when #,units are sold' Using the high9low ethod, what is thevariale portion o$ sales salaries and "oission@

a' E' per unit

' E'# per unit

"' E'# per unit

d' E'# per unit

ales salaries and "oissions are E#, when, units are sold, and E#2, when #,units are sold' Using the high9low ethod, what is the variale portion o$ sales salaries and "oission@

a' E' per unit' E'# per unit

"' E'# per unit

d' E'# per unit

ui"/ Che"/

E2, P 2, units K E'# per unit

Units Cost

High level 120,000 14,000$

Lo level !0,000 10,000

Change 40,000 4,000$




ui"/ Che"/

ales salaries and "oissions are E#, when, units are sold, and E#2, when #,units are sold' Using the high9low ethod, what isthe $i%ed portion o$ sales salaries and "oissions@

a' E ,

' E 2,

"' E#,

d' E#,


a' E ,

' E 2,

"' E#,

d' E#,





a' E ,

' E 2,

"' E#,

d' E#,


a' E ,' E 2,

"' E#,

d' E#,

ui"/ Che"/




Least96uares 1egression .ethod

A ethod used to analy4e i%ed "osts i$ as"attergraph plot reveals an appro%iately linear

relationship etween the ( and ' variales'

(his ethod uses(his ethod uses all all o$ theo$ thedata points to estiatedata points to estiate

the $i%ed and varialethe $i%ed and variale

"ost "oponents o$ a"ost "oponents o$ ai%ed "ost'i%ed "ost'

(his ethod uses(his ethod uses all all o$ theo$ thedata points to estiatedata points to estiatethe $i%ed and varialethe $i%ed and variale

"ost "oponents o$ a"ost "oponents o$ a

i%ed "ost'i%ed "ost'(he goal o$ this ethod is(he goal o$ this ethod isto $it a straight line to theto $it a straight line to the

data thatdata that minimi)es theminimi)es the

sum of the s*uared errorssum of the s*uared errors''

(he goal o$ this ethod is(he goal o$ this ethod isto $it a straight line to theto $it a straight line to thedata thatdata that minimi)es theminimi)es the

sum of the s*uared errorssum of the s*uared errors''





o$tware "an e used to $ita regression line throughthe data points'

(he "ost analysis o!e"tiveis the sae: Y " a # bX

Least9s6uares regression also provides a statisti", "alledthe 1, whi"h is a easure o$ the goodness

o$ $it o$ the regression line to the data points'




# 3 2

( o

t a l C o s

t

#

A"tivity

JJJJ

JJ

JJJJ


1 is the per"entage o$ the variation in the dependentvariale total "ost- that is e%plained y variation in the

independent variale a"tivity-'

1 varies $ro Q to #Q, andthe higher the per"entage the etter'

X

Y

C i 1 lt 5 th (h




Coparing 1esults 5ro the (hree.ethods

(he three ethods !ust dis"ussed provide(he three ethods !ust dis"ussed provideslightly di$$erent estiates o$ the $i%ed andslightly di$$erent estiates o$ the $i%ed and

variale "ost "oponents o$ the i%ed "ost'variale "ost "oponents o$ the i%ed "ost'

(his is to e e%pe"ted e"ause ea"h ethod(his is to e e%pe"ted e"ause ea"h ethoduses di$$ering aounts o$ the data points touses di$$ering aounts o$ the data points to

provide estiates'provide estiates'

Least9s6uares regression provides the ostLeast9s6uares regression provides the osta""urate estiate e"ause it uses all the dataa""urate estiate e"ause it uses all the data

points'points'

(he three ethods !ust dis"ussed provide(he three ethods !ust dis"ussed provideslightly di$$erent estiates o$ the $i%ed andslightly di$$erent estiates o$ the $i%ed and

variale "ost "oponents o$ the i%ed "ost'variale "ost "oponents o$ the i%ed "ost'

(his is to e e%pe"ted e"ause ea"h ethod(his is to e e%pe"ted e"ause ea"h ethoduses di$$ering aounts o$ the data points touses di$$ering aounts o$ the data points to

provide estiates'provide estiates'

Least9s6uares regression provides the ostLeast9s6uares regression provides the osta""urate estiate e"ause it uses all the dataa""urate estiate e"ause it uses all the data

points'points'




Learning O!e"tive 2

)repare an in"oe)repare an in"oe

stateent using thestateent using the

"ontriution $orat'"ontriution $orat'




Lets put our%nole&ge of cost'ehavior to or%

'y preparing acontri'ution

for(at inco(estate(ent)

(he Contriution 5orat





(he "ontriution argin $orat ephasi4es "ostehavior' Contriution argin "overs $i%ed "osts

and provides $or in"oe'

(he "ontriution argin $orat ephasi4es "ostehavior' Contriution argin "overs $i%ed "osts

and provides $or in"oe'




Uses o$ the Contriution 5orat

(he "ontriution in"oe stateent $orat is usedas an internal planning and de"ision9a/ing tool'

8e will use this approa"h $or:

#'Cost9volue9pro$it analysis Chapter 2-'

'Budgeting Chapter #-'

3'egented reporting o$ pro$it data Chapter #3-'

2'pe"ial de"isions su"h as pri"ing and a/e9or9uy analysis Chapter #2-'

(he "ontriution in"oe stateent $orat is usedas an internal planning and de"ision9a/ing tool'

8e will use this approa"h $or:

#'Cost9volue9pro$it analysis Chapter 2-'

'Budgeting Chapter #-'

3'egented reporting o$ pro$it data Chapter #3-'

2'pe"ial de"isions su"h as pri"ing and a/e9or9uy analysis Chapter #2-'





Used priarily $or Used priarily $or e%ternal reporting'e%ternal reporting'

Used priarily yUsed priarily yanageent'anageent'



© 2012 McGraw-Hill Education (Asia)

Least96uares 1egressionCoputations

Appendi% 3A




Learning O!e"tive

Analy4e a i%ed "ost Analy4e a i%ed "ost

using the least9s6uaresusing the least9s6uares

regression ethod'regression ethod'




iple 1egression Analysis * An 0%aple

.atri%, ?n"' wants to.atri%, ?n"' wants to

/now its average/now its average$i%ed "ost and$i%ed "ost and

variale "ost per unit'variale "ost per unit'

Using the data to theUsing the data to the

right, let;s see how toright, let;s see how to

do a regression usingdo a regression using

.i"roso$t 0%"el'.i"roso$t 0%"el'

.atri%, ?n"' wants to.atri%, ?n"' wants to

/now its average/now its average

$i%ed "ost and$i%ed "ost and

variale "ost per unit'variale "ost per unit'

Using the data to theUsing the data to the

right, let;s see how toright, let;s see how to

do a regression usingdo a regression using

.i"roso$t 0%"el'.i"roso$t 0%"el'




iple 1egression Using 0%"el * An 0%aple

You will need three pie"es o$in$oration $ro yourregression analysis:

#' 0stiated +ariale Cost )erUnit line slope-

' 0stiated 5i%ed Costs lineinter"ept-

3' Goodness o$ $it, or 1

(o get these three pie"esin$oration we will need touse three 0%"el $un"tions'

LO)0, ?N(01C0)(, and 1

(o get these three pie"es

in$oration we will need touse three 0%"el $un"tions'

LO)0, ?N(01C0)(, and 1





)la"e your "ursor in)la"e your "ursor in

"ell 52 and press the"ell 52 and press theK /ey' Cli"/ on theK /ey' Cli"/ on the

pull down enu andpull down enu and

s"roll down to <.ores"roll down to <.ore5un"tions ' ' '=5un"tions ' ' '=

)la"e your "ursor in)la"e your "ursor in

"ell 52 and press the"ell 52 and press theK /ey' Cli"/ on theK /ey' Cli"/ on the

pull down enu andpull down enu and

s"roll down to <.ores"roll down to <.ore5un"tions ' ' '=5un"tions ' ' '=




"roll down to the"roll down to the<<tatisti"altatisti"al=,=,

$un"tions' Now$un"tions' Now

s"roll down thes"roll down thestatisti"alstatisti"al

$un"tions until you$un"tions until you

highlighthighlight

<<LO)0LO)0==





#' ?n the >nownRy;s o%, enter C2:C#D $or the range'

' ?n the >nownR%;s o%, enter 72:7#D $or the range'





Fere is theFere is theestiate o$ theestiate o$ the

slope o$ the line'slope o$ the line'




iple 1egression Using 0%"el An 0%aple




8ith your "ursor in8ith your "ursor in

"ell 5, press the K"ell 5, press the K/ey and go to the pull/ey and go to the pull

down enu $ordown enu $or<pe"ial 5un"tions'=<pe"ial 5un"tions'=

ele"tele"t tatisti"altatisti"al andands"roll down tos"roll down to

highlight thehighlight the

?N(01C0)(?N(01C0)( $un"tion'$un"tion'


i l 1 i U i 0 l A 0 l






Fere is theFere is theestiate o$ theestiate o$ the







5inally, we will5inally, we will

deterine thedeterine the

<<goodness ofgoodness of

fit fit =, or=, or + + 2 2 , y, y

using theusing the +S,+S, $un"tion'$un"tion'


iple 1egression Using 0%"el An 0%aple






Fere is theFere is theestiate o$estiate o$ 11''




0nd o$ Chapter 3

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