Skip to content

CMA Final · Strategic Cost Management · Business Forecasting Models - Time Series and Regression Analysis

A regression of monthly electricity cost Y (₹ thousand) on machine hours X (thousand) for a plant gives: n = 5, ΣX = 15, ΣY = 40, ΣXY = 130, ΣX² = 55. What is the estimated value of Y when X = 4?

The estimated cost is ₹9 thousand. The slope is (5×130 - 15×40)/(5×55 - 15²) = 50/50 = 1, the intercept is 8 - 3 = 5, so at X = 4 the estimate is 5 + 4 = 9.

  1. A10Correct
  2. B11
  3. C9
  4. D12

Explanation

b = (nΣXY - ΣXΣY)/(nΣX² - (ΣX)²) = (650 - 600)/(275 - 225) = 50/50 = 1. Mean Y = 8, mean X = 3, so a = 8 - 1×3 = 5. At X = 4, Y = 5 + 4 = 9... recheck: 5 + 1×4 = 9. So the answer is 9.

Did you get it right without looking?

One question tells you little. A timed set on Business Forecasting Models - Time Series and Regression Analysis shows your real accuracy, how long you take and where you lose marks.

Practise Business Forecasting Models - Time Series and Regression AnalysisFree diagnostic mock

More Business Forecasting Models - Time Series and Regression Analysis questions