17 3.6 Appendix- Performing Regression Analysis with Excel
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Last updated
- Dec 28, 2020
Learning Objectives
- Perform regression analysisusing Excel.
Question:
Regression analysis is often performed to estimate fixed and variable costs. Many different software packages have the capability of performing regression analysis , including Excel. This appendix provides a basic illustration of how to use Excel to perform regression analysis. Statistics courses cover this topic in more depth. How is regression analysis used to estimate fixed and variable costs?
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The discussion of regression analysis in this chapter is meant to serve as an introduction to the topic. To further enhance your knowledge of regression analysis and to provide for a more thorough analysis of the data, you should pursue the topic in an introductory statistics course.
Key Takeaway
Software applications, such as Excel, can use regression analysis to estimate fixed and variable costs.
- Once the data analysis package is installed, historical data are entered in the spreadsheet, and the regression analysis is run.
- The resulting data are used to determine the cost equation, which includes estimated fixed and variable costs.
The line fit plot and R-squared statistic are used to assess the usefulness of the cost equation in estimating costs.
Refer to the monthly production cost data for Alta Production, Inc., in Note 3.21 “Review Problem 3.5”. Use the four steps of
regression analysis described in this appendix to estimate total fixed costs and variable cost per unit. State your results in the equation form Y=f+vX.
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Definitions
- Measures the percent of the variance in the dependent variable explained by the independent variable.
