MULTIPLE REGRESSION

The least square regression equation discussed above was based on the assumption that total cost was determined by only one activity based variable. However, other variables are likely to affect labour costs such as labour hours, material costs, machine hours, etc. These may have an effect on labour costs.

The equation for the simple regression can be expanded to include more than one independent variable as shown below:

Y = a + b₁X₁ + b₂ X₂ + b₃ X₃ +………+b_n X_n

For two independent variables, the function will be of the form:

Y = a + b₁X₁ + b₂ X₂

The normal equations can be given by:
∑y      = na + b₁ ∑X₁ + b₂∑x₂
∑X₁Y  = a∑x₁ + b₁∑X₁₂ + b₂ ∑X₁ ∑X₂
∑X₂ Y = a∑x₂ + b₁∑  X 1∑X₂ +b₂ ∑X₂ 

Normally computers are used for the solution of multiple regression.

Posted Date: 12/5/2012 6:32:29 AM | Location : United States

Ask an Expert

Related Discussions:- Multiple regression, Assignment Help, Ask Question on Multiple regression, Get Answer, Expert's Help, Multiple regression Discussions

Write discussion on Multiple regression
Your posts are moderated

Write your message here..

Related Questions

Make and b, The Rohr Company’s old equipment for making subassemblies is wo... The Rohr Company’s old equipment for making subassemblies is worn out. The company is considering two courses of action: (a) Completely replacing the old equipment with new equipme

POHR, #questioExercise 3-12 Computing Predetermined Overhead Rates and Job ... #questioExercise 3-12 Computing Predetermined Overhead Rates and Job Costs [LO1, LO2, LO3, LO7] Kody Corporation uses a job-order costing system with a plantwide overhead rate base

Exercises and Problems, 5 5

College accounting contemporary approach, question 3.5A Trial balance shee... question 3.5A Trial balance sheet,income statement, owner''s equity and balance sheet

Accounting rate of return - arr, ARR gives a fast estimate of a project's v... ARR gives a fast estimate of a project's value over its useful life. ARR is derived by determining profits before taxes and interest.   ARR is an accounting technique used fo

Explain operating budgets, Explain Operating budgets These budgets rela... Explain Operating budgets These budgets relate to the dissimilar activities or operation of a firm the number of such budgets depends upon the size and nature of business. The

7. Alma and Associates, Alma and Associates, a new consulting service, rece... Alma and Associates, a new consulting service, recently received a bill for repairs on its computers totaling $2,350. Alma thinks it may have been overcharged and is trying to recr

Determine the proprietary ratio and equity ratio, Proprietary ratio/ equit... Proprietary ratio/ equity ratio  Meaning: the ratio measures a relationship among proprietor's funds and the total assets. Objective: the objective of computing this ra

#titl, interest rates interest rates

Principles and practices of management, critically analyze mr vincent reaso... critically analyze mr vincent reasoning