For each of the following situations tell whether the predicted value or the res

Question

For each of the following situations tell whether the predicted value or the residual would be most useful.

a) For budgeting purposes, you need to know what number to place under "cost of goods sold" based on the expected sales figure for the next quarter.

b) You would like to see how your divisions are performing after adjusting for how well you expect them to do given the resources they consume.

c) To help you set the salary of a new employee, you want to know a reasonable pay figure for a person with the same experience.

d) As part of a payroll policy analysis report, you wish to show how much more (or less) each employee is paid compared to the expected salary for a person with the same experience.

Thank you!

Explanation / Answer

when we need to find the actual values we go for predicted values , whenever we want to see the deviations that are more or less from a given value we can slect residuals

a) For budgeting purposes, you need to know what number to place under "cost of goods sold" based on the expected sales figure for the next quarter.

Here want a number for the next quarter , hence a predicted value must be used

b) You would like to see how your divisions are performing after adjusting for how well you expect them to do given the resources they consume.

here we are concerned about the performance after adjustments ,hence we would measure residuals here to check for the differences

c) To help you set the salary of a new employee, you want to know a reasonable pay figure for a person with the same experience.

This is again a predicted value , as we want to know the exact number for salary of the new employee

d) As part of a payroll policy analysis report, you wish to show how much more (or less) each employee is paid compared to the expected salary for a person with the same experience.
Thank you!

Again , deviation in form of more or less each employee is paid , hence residual must be considered

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.