![]() ![]() R-squared Measures the percent of the variance in the dependent variable explained by the independent variable. Another way to assess the accuracy of the regression output is to review the R-squared statistic shown in cell B5. Thus the cost equation created from the regression analysis is likely to be useful in predicting total production costs. Line Fit Plot and R-Squared: The plot shows that actual total production costs are very close to predicted total production costs calculated using the cost equation.Thus the cost equation is: Y = $43,276 + $53.42X or Total Production Costs = $43,276 + ($53.42 × Units Produced) Here, we discuss key items shown in the regression output provided in step 3.Ĭost Equation: The output shows that estimated fixed costs (shown as the Intercept coefficient in cell B17) total $43,276, and the estimated variable cost per unit (shown as the Units Produced coefficient in B18) is $53.42. Thus use one column (column A) to enter Total Production Costs data and another column (column B) to enter Units Produced data. The monthly data in Table 5.4 "Monthly Production Costs for Bikes Unlimited" includes Total Production Costs and Units Produced. Using a new Excel spreadsheet, enter the data points in two columns. Look for the Load the Analysis ToolPak option and follow the instructions given. If Data Analysis does not appear, go to the help button (denoted as a question mark in the upper right-hand corner of the screen) and type Analysis ToolPak. If Data Analysis appears, you are ready to perform regression analysis. Go to the Data tab on the top menu bar and look for Data Analysis. Confirm that the Data Analysis package is installed. We now describe the steps to be performed in Excel to get this equation. This will skew your regression equation and make the coefficient less meaningful.The resulting equation to estimate production costs is Y = $43,276 + $53.42X. Using 1, 2, and 3 you are saying that the second item is twice as important as the first, and the third item is three times as important. You were on the right track trying to use arbitrary values, but it gives some strange results. The overall "slope" of the regression will not change, but the starting point of the line will move up or down depending on which category you are trying to predict. The end result with be a regression equation with different Y-intercepts depending on which non-numeric value is used. If you try to add a third dummy variable to this regression, you will get a strange result with the coefficient of one variable being 0. ![]() You do not need a third dummy variable, because if an item is not the first or second variable, it must be the third. If the row is the second non-numeric value return a 1, if not return a 0. The next dummy variable will check if the item in that row is the second of the three non-numeric values. If the row is the first non-numeric value return a 1, if not return a 0. The first dummy variable will check if the item in that row is one of the non-numeric values. They always have a value of either 0 or 1. Dummy variables denote if an item is in a specific category or not. With three values you will need to create two columns for the dummy variables. One way to deal with this is by using dummy variables for the values in Column B. They are identifiable with a special user flair.Ī community since MaAsking a question? Describe if you are using Excel (include version and operating system!), Google Sheets, or another spreadsheet application. Occasionally Microsoft developers will post or comment. Recent ClippyPoint Milestones !Ĭongratulations and thank you to these contributors Date Include a screenshot, use the tableit website, or use the ExcelToReddit converter (courtesy of u/tirlibibi17) to present your data. NOTE: For VBA, you can select code in your VBA window, press Tab, then copy and paste that into your post or comment. To keep Reddit from mangling your formulas and other code, display it using inline-code or put it in a code-block This will award the user a ClippyPoint and change the post's flair to solved. OPs can (and should) reply to any solutions with: Solution Verified Only text posts are accepted you can have images in Text posts.Use the appropriate flair for non-questions.Post titles must be specific to your problem. ![]()
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