managerial accounting 15th ed chapter 2a

PowerPoint Authors:Susan Coomer Galbreath, Ph.D., CPACharles W. Caldwell, D.B.A., CMAJon A. Booker, Ph.D., CPA, CIACynthia J. Rooney, Ph.D., CPA

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Least-Squares Regression ComputationsAppendix 2A

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Learning Objective 8

Analyze a mixed cost using a scattergraph plot

and the least-squares regression method.

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The Data SetMatrix, Inc. wants to Matrix, Inc. wants to

know its average know its average fixed cost and fixed cost and

variable cost per variable cost per meals served. meals served.

Using the data to the Using the data to the right, let’s see how to right, let’s see how to

do a Scattergraph do a Scattergraph plot using Microsoft plot using Microsoft

Excel.Excel.

Matrix, Inc. wants to Matrix, Inc. wants to know its average know its average

fixed cost and fixed cost and variable cost per variable cost per meals served. meals served.

Using the data to the Using the data to the right, let’s see how to right, let’s see how to

do a Scattergraph do a Scattergraph plot using Microsoft plot using Microsoft

Excel.Excel.

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Scattergraph Plot

Highlight Cells C4 through D19.from the Insert Menu in Excel, selectGraph. and the Scattergraph withno lines. You should produce a graph that looks similar to the one shown on the right.

Highlight Cells C4 through D19.from the Insert Menu in Excel, selectGraph. and the Scattergraph withno lines. You should produce a graph that looks similar to the one shown on the right.

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Scattergraph Plot

Right click on any of the grid values and enter the text as shown. The X axis should read “Units (Meals), and the Y axis should read Total Cost.

Right click on any of the grid values and enter the text as shown. The X axis should read “Units (Meals), and the Y axis should read Total Cost.

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Scattergraph Plot

Right click on anydata point in the scattergraph plot and selecting “Add Trendline” from the graph submenu. The relationship appears to be linear, so we can apply the regression model.

Right click on anydata point in the scattergraph plot and selecting “Add Trendline” from the graph submenu. The relationship appears to be linear, so we can apply the regression model.

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Simple Regression Using ExcelYou will need three pieces of

information from your regression analysis:

1. Estimated Variable Cost Per Unit (line slope)

2. Estimated Fixed Costs (line intercept)

3. Goodness of fit, or R2

You will need three pieces of information from your regression analysis:

1. Estimated Variable Cost Per Unit (line slope)

2. Estimated Fixed Costs (line intercept)

3. Goodness of fit, or R2

To get these three pieces information we will need to use three Excel functions in the Statistical Group of special functions.

SLOPE, INTERCEPT, and RSQ

To get these three pieces information we will need to use three Excel functions in the Statistical Group of special functions.

SLOPE, INTERCEPT, and RSQ

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Simple Regression Using Excel

Place your cursor in cell F4 and press the = key. Place your cursor in cell F4 and press the = key. Click on the pull down menu and scroll down to Click on the pull down menu and scroll down to

“Statistical” and scroll until you see “Slope.”“Statistical” and scroll until you see “Slope.”

Place your cursor in cell F4 and press the = key. Place your cursor in cell F4 and press the = key. Click on the pull down menu and scroll down to Click on the pull down menu and scroll down to

“Statistical” and scroll until you see “Slope.”“Statistical” and scroll until you see “Slope.”

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For “Known_y’s” highlight cells D4 through D19, and For “Known_y’s” highlight cells D4 through D19, and for “Known_x’s” highlight cells C4 through C19. for “Known_x’s” highlight cells C4 through C19.

Notice the Slope is calculated at 2.7684.Notice the Slope is calculated at 2.7684.

For “Known_y’s” highlight cells D4 through D19, and For “Known_y’s” highlight cells D4 through D19, and for “Known_x’s” highlight cells C4 through C19. for “Known_x’s” highlight cells C4 through C19.

Notice the Slope is calculated at 2.7684.Notice the Slope is calculated at 2.7684.

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Place your cursor in cell F5 and press the = key. Place your cursor in cell F5 and press the = key. Click on the pull down menu and scroll down to Click on the pull down menu and scroll down to “Statistical” and scroll until you see “Intercept.”“Statistical” and scroll until you see “Intercept.”

Place your cursor in cell F5 and press the = key. Place your cursor in cell F5 and press the = key. Click on the pull down menu and scroll down to Click on the pull down menu and scroll down to “Statistical” and scroll until you see “Intercept.”“Statistical” and scroll until you see “Intercept.”

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1. In the Known_y’s box, enter D4:D19 for the range.

2. In the Known_x’s box, enter C4:C19 for the range.



Simple Regression Using Excel Here is the Here is the

estimate of the estimate of the fixed costs.fixed costs.

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Finally, we will determine the “Finally, we will determine the “goodness of fitgoodness of fit”, or ”, or RR22, by , by using the using the RSQRSQ function. Move your cursor to Cell F6. function. Move your cursor to Cell F6.

Finally, we will determine the “Finally, we will determine the “goodness of fitgoodness of fit”, or ”, or RR22, by , by using the using the RSQRSQ function. Move your cursor to Cell F6. function. Move your cursor to Cell F6.


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Here is the Here is the estimate of estimate of RR22..

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Notice that Excel depicts its least-squares regression equation as Y = bX + a. We can easily rearrange with equation.

Notice that Excel depicts its least-squares regression equation as Y = bX + a. We can easily rearrange with equation.

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End of Appendix 2A