Project Essay Example | Topics and Well Written Essays - 750 words - 7

Project - Essay Example However there is a steep slope in the graph and this can be due to the change in the level of production within the two years. Although very few of the points are on the line, they move towards the same direction. The final graph represents the total cost versus the machine hours. The machine hours that are used in production fluctuate over the years but they move in the same direction. Some points are scattered far away from the line and this can be due to factors that might not have a significant impact and did not affect the long term trend of the graph. The behavior of the cost of the rent is that it increases over the years and will push up the costs of production in the years to come, although it remains constant throughout the year. According to relevant range the fixed costs of production will not change as output changes. This applies to the rent as it does not fluctuate with the total output. The least squares method is used to determine the best fit of a particular curve that is represented in a graph. This is the curve that has the least number of the squared deviations from a particular data set that has been given. There are various advantages of using the least squares method. This method increases the accuracy and speed of calculations that involve a large number of digits. It is used when there are a large number of values, ranging up to a thousand and presents a simulation that brings out the most feasible approach (Rawlings & Pantula, 2010). This is more practical in a real world scenario given that such calculations are usually full of errors and the least squares method presents the best approximate solution. The distribution curves in the method are applicable in determining the put or call option prices that are realistic in the market place. Therefore inaccurate estimates can be proportionally represented. Any slight deviation that may arise from this metho d