Cost Account

Least Square Regres

Least-squares regression is a statistical technique that may be used to estimate a
linear total cost function for a mixed cost, based on past cost data. The cost
function may then be used to predict the total cost at a given level of activity
such as number of units produced or labor/machine hours used.

BATCH UNITS (x) TOTAL COST (y) UNITS (X²) UNITS,TOTAL COST (XY)
1 680 $ 29,800.00 462400 20264000 n
2 820 $ 34,000.00 672400 27880000 Σy
3 570 $ 27,500.00 324900 15675000 Σx
4 660 $ 29,000.00 435600 19140000 Σxy
5 750 $ 31,900.00 562500 23925000 Σx²

TOTAL 3480 152200 2457800 106884000

Unit Variable Cost (b) 26.6741 26.6741321

Total Fixed Cost (a) 11877.68
11877.68
The cost vloume total formula 11877.68 + 26.67
Cost Accounting

are Regression Method

_______

5
152200
3480
106884000
2457800
g

ion Method

Where,
n is number of pairs of units–total-cost used in the calculation;
Σy is the sum of total costs of all data pairs;
Σx is the sum of units of all data pairs;
Σxy is the sum of the products of cost and units of all data pairs; and
Σx2 is the sum of squares of units of all data pairs.
x y x2 total cost xy
80 800 6400 64000
60 480 3600 28800
20 320 400 6400
120 1200 14400 144000
140 1280 19600 179200
40 480 1600 19200
100 1040 10000 104000

560 5600 56000 545600 total

unit variable cost 8.71

total fixed cost 103.2

total cost formula 103.2 + 8.71

MONTH] UNITS PRODUCED (X) PRODUCTION COST (Y) X2 TOTAL XY

APRIL 500 $4,000.00 $250,000.00 $2,000,000.00
MAY 700 $8,000.00 $490,000.00 $5,600,000.00
JUNE 900 $6,000.00 $810,000.00 $5,400,000.00
JULY 600 $7,500.00 $360,000.00 $4,500,000.00
AUGUST 800 $8,500.00 $640,000.00 $6,800,000.00
SEPTEMBER 550 $7,250.00 $302,500.00 $3,987,500.00

TOTAL $4,050.00 $41,250.00 $2,852,500.00 $28,287,500.00

X Y
MONTH MACHINE HOURS ELECTRICAL COST X2 XY
 JANUARY 4000 $3,120.00 $16,000,000.00 $12,480,000.00
FEBRUARY 6000 $4,460.00 $36,000,000.00 $26,760,000.00
MARCH 4800 $3,500.00 $23,040,000.00 $16,800,000.00
APRIL 3800 $3,040.00 $14,440,000.00 $11,552,000.00
MAY 3600 $2,900.00 $12,960,000.00 $10,440,000.00
JUNE 4200 $3,200.00 $17,640,000.00 $13,440,000.00

TOTAL 26400 $20,220.00 120080000.00 $91,472,000.00

HIGH - LOW METHOD

4,460 - 2,900 1,560
6,000 3,600 2,400

0.65 Variable rate per unit

4,460 = 0.65 X 6,000

4,460 = 3900 + FC

4,460 - 3,900 = FC

FC = 560
 n 7
Σy 5600
Σx 560
Σxy 545600
Σx² 56000

8.714285714286 1280-320 960

103.2 140-20 120

x y x2 total costxy
3500 31500 12250000 110250000
2000 20000 4000000 40000000
4000 35600 16000000 142400000
total 9500 87100 32250000 292650000

unit variable cost 7.77

total fixed cost 4428.33

total cost formula 4428.33 + 7.77

n 6
Σy $41,250.00 2662500.00 712500.00
Σx $4,050.00 26103.00 6.00
Σxy $28,287,500.00
Σx² $2,852,500.00

UNIT VARIABLE COST 3.74

TOTAL FIXED COST 4350.50
TOTAL COST FORMULA 4350.5+3.74
 20,220 = 6 a + b
91,472,000 = 26400 a + b
88968000 = 26400 a + b

2,504,000 = b
3,920,000

B = 0.64

20,220 = 6 a +
20,220 = 6 a +
20,220 = 6 a +
20,220 - 16,896 = 6 a
3,324 = 6 a
6 6

+ FC A = 554

6 91,472,000 - 26,400 20,220

6 120,080,000 - 26,400

15024000
23520000

B = 0.64

20,220 - 0.64 26,400

3324
A = 554
 A = 554
6
 8

HIGH - LOW METHOD

35,600 - 20,000 15,600
4,000 2,000 2,000

7.8
7.76923076923
4428.33333333
35,600 = 0.78 X 4,000 + FC
35,600 = 3120 + FC

35,600 - 3,120 = FC

FC = 32,480
 26400 4400
120,080,000
116160000

3,920,000
3,920,000

b 26,400
0.64 26,400
16896

554
554