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

2. 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

3. Analysis ToolPak Installation Step 1 File/Options 3

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

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

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

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

8. Review: High-Low 8

9. 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 3 +... + 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

10. 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= 3,723 + 2.44*X Regression Method Y= 2,618.7 + 2.8*X **Y=Total cost X= number of meals High Low 10

11. 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=3,400 + 0.8*X Regression Method Y=3,431 + 0.75*X **Y=Total maintenance cost X= number of patient days High Low 11

12. Number of Orders Billing Costs in $ 150042000 190046000 100037000 130043000 280054000 170047000 210051000 110042000 200048000 240053000 230049000 Regression Data 3 High-Low Method Y=27,560 + 9.44*X Regression Method Y=30,644.5 + 8.7*X **Y=Total billing cost X= number of orders High Low 12

13. Summary: High-Low vs. Regression 13

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

15. THANK YOU! 15