REGRESSION ANALYSIS
A regression equation identifies an estimated relationship between a dependent variable (the cost) and one or more independent variables (the cost driver). When the equation includes only one independent variable then it is referred to as simple regression and its form is:
Where,
Y is the predicted value of Ya and b are Constantx is the cost driverWhen the equation includes 2 or more independent variables, it is referred to as multiple regression and is of the form:
Y = a + b _{1} x_{1} + b_{2} x_{2} + …….b_{n} x_{n} for n independent variables.