Question Twenty Two

You work as the management accountant for Majani Limited which deals in tea production and export.
Before embarking on next year’s budgeting, you are tasked with analysing past revenue and price trends.
As a starting point, your supervisor has provided you with historical price and production data as shown in the
worksheet mgt.xls.

Date Production (million) Kgs Price per kg

2010-01-01 32.80 182.39
2010-02-01 23.60 192.25
2010-03-01 15.00 192.19
2010-04-01 19.30 188.50
2010-05-01 26.00 182.09
2010-06-01 19.50 196.95
2010-07-01 18.90 204.48
2010-08-01 19.90 191.95
2010-09-01 26.40 195.41
2010-10-01 31.60 200.48
2010-11-01 27.00 200.00
2010-12-01 32.90 205.22
2011-01-01 31.10 202.82
2011-02-01 28.10 198.10
2011-03-01 28.90 191.78
2011-04-01 29.40 177.95
2011-05-01 28.40 186.62
2011-06-01 23.90 186.59
2011-07-01 18.60 190.73
2011-08-01 18.90 206.45
2011-09-01 23.00 240.73
2011-10-01 27.40 201.76
2011-11-01 32.00 192.50
2011-12-01 34.60 201.78
2012-01-01 34.10 236.67
2012-02-01 25.80 258.10
2012-03-01 24.80 241.52
2012-04-01 29.10 190.71
2012-05-01 28.80 200.32
2012-06-01 24.00 223.41
2012-07-01 20.80 201.38
2012-08-01 21.80 211.83
2012-09-01 26.90 224.41
2012-10-01 32.30 211.57
2012-11-01 30.00 194.77
2012-12-01 29.80 201.86
2013-01-01 17.90 225.00
2013-02-01 11.70 278.90
2013-03-01 19.90 259.74
2013-04-01 30.40 230.45
2013-05-01 26.40 238.26
2013-06-01 27.70 250.14
2013-07-01 23.80 263.81
2013-08-01 23.20 247.22
2013-09-01 28.60 229.81
2013-10-01 34.80 224.27
2013-11-01 31.60 213.23
2013-12-01 34.40 239.57
2014-01-01 41.60 249.70
2014-02-01 34.80 212.50
2014-03-01 32.20 203.27
2014-04-01 30.70 192.05
2014-05-01 32.10 190.04
2014-06-01 27.30 202.05
2014-07-01 22.70 211.91
2014-08-01 22.70 210.39
2014-09-01 28.90 231.25
2014-10-01 35.20 224.30
2014-11-01 32.30 209.64
2014-12-01 28.80 206.05
2015-01-01 29.70 229.70
2015-02-01 24.10 264.67
2015-03-01 16.90 246.29
2015-04-01 27.40 260.91
2015-05-01 36.40 265.14
2015-06-01 22.80 284.52
2015-07-01 24.20 287.48
2015-08-01 24.50 321.90
2015-09-01 32.00 321.59
2015-10-01 35.30 282.39
2015-11-01 34.40 241.00
2015-12-01 37.90 228.48
2016-01-01 25.50 261.59
2016-02-01 21.50 270.00
2016-03-01 18.80 262.86
2016-04-01 18.30 277.41
2016-05-01 29.80 288.00
2016-06-01 25.30 287.14
2016-07-01 21.50 337.65
2016-08-01 21.20 328.38
2016-09-01 27.40 374.41
2016-10-01 32.80 344.77
2016-11-01 35.90 361.05
2016-12-01 36.10 374.22
2017-01-01 37.70 338.67
2017-02-01 34.80 332.35
2017-03-01 39.20 332.61
2017-04-01 35.90 313.59
2017-05-01 35.60 286.14
2017-06-01 29.80 262.36
2017-07-01 24.40 259.18
2017-08-01 23.10 315.09
2017-09-01 28.80 337.18
2017-10-01 34.10 339.86
2017-11-01 37.00 331.68
2017-12-01 38.30 352.13
2018-01-01 35.90 368.10
2018-02-01 26.70 349.75
2018-03-01 22.40 330.65
2018-04-01 31.40 325.33
2018-05-01 32.80 327.68
2018-06-01 28.90 334.05
2018-07-01 26.30 356.14
2018-08-01 24.40 358.17
2018-09-01 30.50 362.27
2018-10-01 39.90 357.14
2018-11-01 36.80 351.27
2018-12-01 41.30 333.36
 2019-01-01 36.20 337.27
2019-02-01 18.40 341.00
2019-03-01 17.80 341.00
2019-04-01 18.10 341.00
2019-05-01 37.30 341.00
2019-06-01 30.20 341.00
2019-07-01 24.30 345.59
2019-08-01 31.90 353.18
2019-09-01 33.50 358.23
2019-10-01 40.20 368.16
2019-11-01 39.90 368.11
2019-12-01 41.40 351.44
2020-01-01 45.30 338.87
2020-02-01 38.50 320.90
2020-03-01 33.30 297.40
2020-04-01 38.20 266.31
2020-05-01 39.60 272.37
2020-06-01 30.50 258.71
2020-07-01 26.20 256.16
2020-08-01 26.30 248.04
2020-09-01 32.80 230.49
2020-10-01 44.30 221.72
2020-11-01 35.50 235.26
2020-12-01 41.70 245.69
2021-01-01 44.90 249.00
2021-02-01 33.70 256.98
2021-03-01 33.30 237.73
2021-04-01 39.90 223.41
2021-05-01 41.10 219.52
2021-06-01 31.90 223.70
2021-07-01 30.80 232.39
2021-08-01 26.80 235.78
2021-09-01 33.30 232.95
2021-10-01 45.40 256.19
2021-11-01 38.60 243.34
2021-12-01 45.10 243.31
2022-01-01 41.70 269.62
2022-02-01 24.30 296.35
2022-03-01 15.70 307.56
2022-04-01 23.80 290.74
2022-05-01 37.50 313.81
2022-06-01 32.20 355.88
2022-07-01 30.94 403.03
2022-08-01 28.41 387.33
2022-09-01 36.84 371.21
2022-10-01 41.34 391.84
2022-11-01 40.38 353.77

Required:
(a) Plot a line graph for price against time/dates. Insert a linear trend line displaying the equation and R-squared (14 marks)
on the chart. Briefly discuss your results.

(b) Using a suitable MS Excel function, show that the coefficients shown in the trendline in (a) above are in (2 marks)
fact a result of a linear estimation between the historical prices and time.

(c) You know that prices are affected by production. Because of this, you would like to run a regression between
price, production and time. Use data analysis ToolPack to run regression analysis. Interpret your results. (4 marks)
Be sure to discuss the coefficients and parameters. (A and B) Using DATA TOOLPACK (Total: 20 marks)
X Pdn(Kgs)
Y Price

Y=A+BX Y= Dependent variable

X= Independent
 APRIL 2023N Q22
a) Gragh of Price against Time

Time/Date Price

2010-01-01 182.39
2010-02-01 192.25
2010-03-01 192.19
2010-04-01 188.50
2010-05-01 182.09
2010-06-01 196.95
2010-07-01 204.48
2010-08-01 191.95
2010-09-01 195.41
2010-10-01 200.48
2010-11-01 200.00
2010-12-01 205.22
2011-01-01 202.82
2011-02-01 198.10
2011-03-01 191.78
2011-04-01 177.95
2011-05-01 186.62
2011-06-01 186.59
2011-07-01 190.73
2011-08-01 206.45
2011-09-01 240.73
2011-10-01 201.76
2011-11-01 192.50
2011-12-01 201.78
2012-01-01 236.67
2012-02-01 258.10
2012-03-01 241.52
2012-04-01 190.71
2012-05-01 200.32
2012-06-01 223.41
2012-07-01 201.38
2012-08-01 211.83
2012-09-01 224.41
2012-10-01 211.57
2012-11-01 194.77
2012-12-01 201.86
2013-01-01 225.00
2013-02-01 278.90
2013-03-01 259.74
2013-04-01 230.45
2013-05-01 238.26
2013-06-01 250.14
2013-07-01 263.81
2013-08-01 247.22
2013-09-01 229.81
2013-10-01 224.27
2013-11-01 213.23
2013-12-01 239.57
2014-01-01 249.70
2014-02-01 212.50
2014-03-01 203.27
2014-04-01 192.05
2014-05-01 190.04
2014-06-01 202.05
2014-07-01 211.91
2014-08-01 210.39
2014-09-01 231.25
2014-10-01 224.30
2014-11-01 209.64
2014-12-01 206.05
2015-01-01 229.70
2015-02-01 264.67
2015-03-01 246.29
2015-04-01 260.91
2015-05-01 265.14
2015-06-01 284.52
2015-07-01 287.48
2015-08-01 321.90
2015-09-01 321.59
2015-10-01 282.39
2015-11-01 241.00
2015-12-01 228.48
2016-01-01 261.59
2016-02-01 270.00
2016-03-01 262.86
2016-04-01 277.41
2016-05-01 288.00
2016-06-01 287.14
2016-07-01 337.65
2016-08-01 328.38
2016-09-01 374.41
2016-10-01 344.77
2016-11-01 361.05
2016-12-01 374.22
2017-01-01 338.67
2017-02-01 332.35
2017-03-01 332.61
2017-04-01 313.59
2017-05-01 286.14
2017-06-01 262.36
2017-07-01 259.18
2017-08-01 315.09
2017-09-01 337.18
2017-10-01 339.86
2017-11-01 331.68
2017-12-01 352.13
2018-01-01 368.10
2018-02-01 349.75
2018-03-01 330.65
2018-04-01 325.33
2018-05-01 327.68
2018-06-01 334.05
2018-07-01 356.14
2018-08-01 358.17
2018-09-01 362.27
2018-10-01 357.14
2018-11-01 351.27
2018-12-01 333.36
2019-01-01 337.27
2019-02-01 341.00
2019-03-01 341.00
2019-04-01 341.00
2019-05-01 341.00
2019-06-01 341.00
2019-07-01 345.59
2019-08-01 353.18
2019-09-01 358.23
2019-10-01 368.16
2019-11-01 368.11
2019-12-01 351.44
2020-01-01 338.87
2020-02-01 320.90
2020-03-01 297.40
2020-04-01 266.31
2020-05-01 272.37
2020-06-01 258.71
2020-07-01 256.16
2020-08-01 248.04
2020-09-01 230.49
2020-10-01 221.72
2020-11-01 235.26
2020-12-01 245.69
2021-01-01 249.00
2021-02-01 256.98
2021-03-01 237.73
2021-04-01 223.41
2021-05-01 219.52
2021-06-01 223.70
2021-07-01 232.39
2021-08-01 235.78
2021-09-01 232.95
2021-10-01 256.19
 2021-11-01 243.34
2021-12-01 243.31
2022-01-01 269.62
2022-02-01 296.35
2022-03-01 307.56 Price
2022-04-01 290.74 450.00
400.00
2022-05-01 313.81 350.00
2022-06-01 355.88 300.00 f(x) = 0.0287402767277254 x − 953.183754341339
R² = 0.413295650406309
250.00 P
2022-07-01 403.03 200.00 L
150.00
2022-08-01 387.33 100.00
50.00
2022-09-01 371.21 0.00
2022-10-01 391.84 1
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
-0 2-0 1-0 0-0 9-0 8-0 7-0 6-0 5-0 4-0 3-0 2-0 1-0 2-0 1-0
-0 -1 -1 -1 -0 -0 -0 -0 -0 -0 -0 -0 -0 -1 -1
10 010 011 012 013 014 015 016 017 018 019 020 021 021 022
2022-11-01 353.77 0
2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

b) Prove that the equation is as result of Time and Price data above
Using excel function called LINE TEST = LINEST 0.02874
ce

953.183754341339
Price
Linear (Price)

1 01 01 01 01 01
3- 2- 1- 2- 1-
-0 0-0 1-0 1-1 2-1
2 2 2 2
20 20 20 20
SUMMARY OUTPUT

Regression Statistics
Multiple R 0.222208454
R Square 0.049376597
Adjusted R 0.043163372
Standard E 59.74969645
Observatio 155

ANOVA
df SS MS F Significance F
Regression 1 28371.06 28371.06 7.947016 0.005454
Residual 153 546214 3570.026
Total 154 574585.1

CoefficientsStandard Error t Stat P-value Lower 95%Upper 95%Lower 95.0%

Upper 95.0%
Intercept 212.3560973 20.62612 10.29549 3.242E-19 171.6073 253.1049 171.6073 253.1049
X Variable 1.880914397 0.667217 2.819045 0.005454 0.562767 3.199061 0.562767 3.199061

Intercept= A = Fixed Price = 212.356

X Variable= SLOPE = Variable price per pdn = 1.881 1 CVP Analysis
2 Budgeting
3 Consolidated F/STMS