Statistical Report (Regression

Costs determination model: Regression analysis

Executive summary

The objective of every organization is to maximize the revenue earned and minimize on the costs. Various types of costs that a firm can incur exist. However, for the AYK Consulting Company, its total costs are incurred while offering consultation services to its clients. Fixed costs are costs that do not vary according to number of output. The opposite are variable costs. The costs incurred by the company are mainly variable because they vary with the type of industry, the complexity of the work, size and loyalty of the customer (Clarke, 1998, p. 1244).

This report examines the how the firm can predict the costs that it will charge its clients without having to go into deep details. The company can estimate the costs of to be charged for the consulting services using a regression model. The costs depend on the variables mentioned such as the industry, the complexity of the work, size and loyalty of the customer. The report will provide a regression model with the data on the costs being regressed and the output analyzed.

Introduction

According to Creswell (2003, p. 106), regression analysis is a statistical tool that is usually utilized by researcher to investigate the relationship that exists between variables. The aim of the investigation is to find a causal effect relationship. Using the data, the researcher can assess the statistical significance of the relationships that have been estimated. The level of confidence that is to be established is that the estimated relationship is close to the actual relationship. Regression analysis has been in use for many years and it has increasingly been applied in various disciplines (Jankowicz, 2005, p. 79).

This study uses regression analysis to establish the relationship that exists between the actual costs incurred by AYK Consulting Company and the cost estimates. Using a regression model, the company will find a viable way of determining its...