EAST-SQUARES COST ESTIMATION

Use these data:

Total
Units Overhead
Produced Costs
You need to know first the following: X Y XY X2
a) Equation for straight line: 21,000 213,400 4,481,400,000 441,000,000
22,000 215,000 4,730,000,000 484,000,000
Y = a + bX 20,500 211,900 4,343,950,000 420,250,000
24,500 230,800 5,654,600,000 600,250,000
23,700 221,000 5,237,700,000 561,690,000
25,300 232,500 5,882,250,000 640,090,000
22,300 216,400 4,825,720,000 497,290,000
Where: 21,300 219,000 4,664,700,000 453,690,000
Y= the value of dependent variable 20,700 218,600 4,525,020,000 428,490,000
a= a constant term 25,200 232,050 5,847,660,000 635,040,000
b= the slope of the line ∑ 226,500 2,210,650 50,193,000,000 5,161,790,000
X= the value of the independent variable SHOW YOUR COMPUTATIONS HERE!
Step 1 ∑XY = a∑X + b∑X2 50,193,000,000 a(226,500)
b) Some formulas: (normal equations) ∑Y = an + b∑X 2,210,650 a(10)

1st ∑XY = a∑X + b∑X2 Step 2

(eliminate a)
2nd ∑Y = an + b∑X

Where:
∑= "the sum of"
n= number of observations

Step 3 ∑Y = an + b∑X
Solve for a 2,210,650 = a (10) + b (226,500)

a10= 2,210,650 -

a10= 2,210,650 -
 a10= 1,336,360.00

a= 1,336,360.00 /

a= 133,636.00

SCATTER GRAPH
 LINEST, INTERCEPT & RSQ SCATTER GRAPH

SHOW YOUR COMPUTATIONS HERE! SHOW YOUR GRAPH H

3.85799144622208 133681.493743

133681.49374307 INTERCEPT

0.842206264862225 RSQ 235,000

230,000 f(x)
R² =
225,000

220,000

Axis Title
215,000

210,000
b(5,161,790,000) 50,193,000,000 = a 226,500 + b 5,161,790,000
b(226,500) 2,210,650 = a 10 + b 226,500 205,000

501,930,000,000 = 2,265,000 + b 51,617,900,000 200,000

20,000 22,0
500,712,225,000 = 2,265,000 + b 51,302,250,000
Axi
1,217,775,000 = - 315,650,000
b= ###
----------------
315,650,000

b= 3.86

3.86 * 226,500

874,290.00
10
SCATTER GRAPH

SHOW YOUR GRAPH HERE!

Chart Title
235,000

230,000 f(x) = 3.85799144622208 x + 133681.49374307

R² = 0.842206264862225
225,000

220,000
Axis Title

Column K
215,000 Linear (Column K)

210,000

205,000

200,000
20,000 22,000 24,000 26,000
Axis Title