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Small business accountants in Melbourne identify the use of a regression analysis

Our small business accountants in Melbourne regularly handle clients that deal with mixed costs on a daily basis. Mixed costs are costs that include both a fixed and variable component, making it difficult to see how the cost will change as production changes. Therefore, our accountants for small business in Southbank can use a regression analysis to estimate the fixed and variable components of a mixed cost.

A regression analysis is a tool used by accountants for small business in Melbourne to help estimate the relationship between variables and to aid in forecasting. It is used to predict the value of one variable in relation to another variable and is done using a spreadsheet program.

The coefficient of determination can also be useful as it provides Melbourne small business accountants with the proportion of variance of one variable that is predictable from the other variable. Therefore, it is a measure that allows businesses and accountants to determine how certain one can be in making decisions from a certain regression graph. It is important to note that Low R-Squares indicate that the chosen independent variable is not a very reliable predictor of the dependant variable.

For more information regarding the use of a regression analysis, please contact our small business accountants in Melbourne today.