Advanced: Regression analysis and confidence intervals CB p.l.c. produces a wide range of electronic components including its

Question:

Advanced: Regression analysis and confidence intervals CB p.l.c. produces a wide range of electronic components including its best selling item, the Laser Switch. The company is preparing the budgets for 2001 and knows that the key element in the Master Budget is the contribution expected from the Laser Switch. The records for this com¬ ponent for the past four years are summarised below, with the costs and revenues adjusted to 2001 values:image text in transcribed

It has been estimated that sales in 2001 will be 260 000 units.
You are required:

(a) as a starting point for forecasting 2001 contri¬
bution, to project the trend, using linear regression; (10 marks)

(b) to calculate the 95% confidence interval of the individual forecast for 2001 if the standard error of the forecast is £14 500 and the appro¬ priate t value is 4.303, and to interpret the value calculated; (3 marks)

(c) to comment on the advantages of using linear regression for forecasting and the limitations of the technique. (7 marks)
(Total 20 marks) CIMA Stage 3 Management Accounting Techniques

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question
Question Posted: