Analysis of Mixed Cost— Using Excel Regression Function for Professor Martin Taylor Presented by Wenxiang Lu

Excel Setup: Analysis ToolPak Installation Analysis Toolpak is NOT pre-installed with Excel 2010 or 2013 We need to install and load it before we can use the statistical functions. Mainly four steps to install Analysis ToolPak. File/Options/Add-Ins/Manage/Analysis ToolPak 2

Analysis ToolPak Installation Step 1 File/Options 3

Analysis ToolPak Installation Step 2 File/Options/Add-Ins 4

Analysis ToolPak Installation Step 3 File/Options/Add-Ins/Manage Click “Go” 5

Analysis ToolPak Installation Step 4: File/Options/Add-Ins/Manage/Analysis ToolPak 6

Analysis ToolPak Installation The “Data Analysis” button is added to the Analysis group under Data tab. 7

Review: High-Low 8

Review: Regression Statistical technique for estimating the relationship between the independent variable(s) and the dependent variable. Two basic types: Simple regression: Y = a + bX + ε Multiple regression: Y = a + b 1 X 1 + b 2 X 2 + B 3 X B t X t + ε Where, Y = dependent variable (the variable that we are trying to predict) X = independent variable (the variable that we are using to predict Y) a = intercept b = slope ε = error term. 9

Month Units (Meals)Total Cost January1280$6,720 February1810$7,260 March1620$7,270 April2830$11,060 May3630$12,580 June2610$8,660 July2460$8,580 August2640$9,550 September3620$13,050 October2840$11,060 November1820$7,320 December1650$7,370 January1260$6,790 February1850$7,480 March1710$6,990 April2940$11,400 Regression Data 1 High-Low Method Y= 3, *X Regression Method Y= 2, *X **Y=Total cost X= number of meals High Low 10

Patient Days Maintenance Costs MonthXY January5600$7,900 February7100$8,500 March5000$7,400 April6500$8,200 May7300$9,100 June8000$9,800 July6200$7,800 Regression Data 2 High-Low Method Y=3, *X Regression Method Y=3, *X **Y=Total maintenance cost X= number of patient days High Low 11

Number of Orders Billing Costs in $ Regression Data 3 High-Low Method Y=27, *X Regression Method Y=30, *X **Y=Total billing cost X= number of orders High Low 12

Summary: High-Low vs. Regression 13

Which method is more accurate? High-Low Regression ˅ 14

THANK YOU! 15