Page 181 - P1 Integrated Workbook STUDENT 2018
P. 181
Forecasting
Linear regression
3.1 What is it?
This performs a similar role to that of the high low method, but it uses mathematical
equations that examine all data in the series in order to improve accuracy.
It calculates a straight line relationship between the variables (x and y) as follows:
Typically,
y = a + bx a = total fixed costs
b = variable cost per unit
n∑xy – ∑x∑y
b =
2
2
n∑x – (∑x) The formulae will be
available in a tab in the
exam if needed
a = y – bx
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