M1 Projection and Forecasting Techniques: Part 1

Question 1

Projection Techniques:
-“xx” scenarios
-___use
-what types? (2)

Answer 1

WHAT-IF SCENARIOS
Internal use ONLY
Sensitivity and scenario

Question 2

Forecasting techniques can be used when?

Answer 2

Internal AND external
Qualitative and quantitative metrics

Question 3

Regression analysis formula

Answer 3

y = a +Bx

Question 4

Regression analysis formula
y = a +Bx
What does each variable stand for?

Answer 4

Y = dependent variable (DY do it yourself don’t depend on others)
a = fixed costs y-axis intercept of line
b = slope of regression line
x = variable costs INDEPENDENT variable

Question 5

Multiple regressions means more than one ___ variable?

Answer 5

INDEPENDENT
variable costs
x in y = a + Bx

Question 6

Proportion of the total variation in the dependent variable (y) explained by the independent variable (x)

Answer 6

Coefficient of determination R2

Higher R2 better fit of regression

Question 7

What does an R2 of 0.81 mean where x is volume and y is total costs

Answer 7

81% of the change in total cost (y = dependent variable) during a period can be attributed to changes in volume (x = independent variable)

Question 8

High low method formula

Answer 8

Total costs = fixed costs + [variable costs per unit * number of units ]

Question 9

As CUMULATIVE production doubles, cumulative average time per unit falls to a fixed percentage of the previous average time - what method is this?

Answer 9

LEARNING CURVE

*remember cumulative

Question 10

Statistical model that can estimate the dependent cost variable (y) based on changes in the independent variable (x)

Answer 10

Regression analysis

*estimates the dependent cost variable

Question 11

What correlation will produce the LEAST risk?

Answer 11

Perfectly negatively correlated