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.

  • CreatedNovember 11, 2015
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