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Least squares Regression Analysis The controller for TG Enterprises is trying to determine whether direct labor hours or machine hours is driving the company's overhead cost. He collected the following data or number of direct labor hours, the number of machine hours, and the associated factory overhead cost for the year 2018: Month Hours January 132 February 130 March 131 126 128 April May Machine Direct Labor Overhead Cost $5,750 $5,685 $5,790 $5,480 June July August 123 135 130 September 132 October 138 November 128 December 143 Hours 724 730 715 685 695 585 775 680 725 840 775 825 $5,590 $5,430 $5,790 $5,705 +($ $5,804 $5,976 $5,487 $6,108 Required a. Using Excel, run a regression on these data using machine hours as the independent variable. Provide the cost formula for overhead cost. Round fixed and variable costs to the nearest cent. Total cost = $ x machine hours)

Least squares Regression Analysis The controller for TG Enterprises is trying to determine whether direct labor hours or machine hours is driving the company's overhead cost. He collected the following data or number of direct labor hours, the number of machine hours, and the associated factory overhead cost for the year 2018: Month Hours January 132 February 130 March 131 126 128 April May Machine Direct Labor Overhead Cost $5,750 $5,685 $5,790 $5,480 June July August 123 135 130 September 132 October 138 November 128 December 143 Hours 724 730 715 685 695 585 775 680 725 840 775 825 $5,590 $5,430 $5,790 $5,705 +($ $5,804 $5,976 $5,487 $6,108 Required a. Using Excel, run a regression on these data using machine hours as the independent variable. Provide the cost formula for overhead cost. Round fixed and variable costs to the nearest cent. Total cost = $ x machine hours)

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter13: Regression And Forecasting Models
Section: Chapter Questions
Problem 40P: The Baker Company wants to develop a budget to predict how overhead costs vary with activity levels....
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Least Squares Regression Analysis The controller for TG Enterprises is trying to determine whether direct labor hours or machine hours is driving the company's overhead cost. He collected the following data on the number of direct labor hours, the number of machine hours, and the associated factory overhead cost for the year 2018: Machine Direct Labor Overhead Cost Month Hours 132 January February 130 March 131 April 126 May 128 June 123 July 135 August 130 September 132 October 138 November 128 December 143 Hours 724 730 715 685 695 585 775 680 725 840 775 825 $5,750 $5,685 $5,790 $5,480 $5,590 $5,430 $5,790 $5,705 $5,804 $5,976 $5,487 $6,108 Required a. Using Excel, run a regression on these data using machine hours as the independent variable. Provide the cost formula for overhead cost. Round fixed and variable costs to the nearest cent. Total cost = $ x machine hours) +($
Transcribed Image Text:Least Squares Regression Analysis The controller for TG Enterprises is trying to determine whether direct labor hours or machine hours is driving the company's overhead cost. He collected the following data on the number of direct labor hours, the number of machine hours, and the associated factory overhead cost for the year 2018: Machine Direct Labor Overhead Cost Month Hours 132 January February 130 March 131 April 126 May 128 June 123 July 135 August 130 September 132 October 138 November 128 December 143 Hours 724 730 715 685 695 585 775 680 725 840 775 825 $5,750 $5,685 $5,790 $5,480 $5,590 $5,430 $5,790 $5,705 $5,804 $5,976 $5,487 $6,108 Required a. Using Excel, run a regression on these data using machine hours as the independent variable. Provide the cost formula for overhead cost. Round fixed and variable costs to the nearest cent. Total cost = $ x machine hours) +($
b. Using Excel, run a regression on these data using direct labor hours as the independent variable. Provide the cost formula for overhead cost. Round the fixed and variable costs to the nearest cent. x direct labor hours) Total cost = $ c. What is the R² for the regression in requirement a? What is the R² for the regression in requirement b? (Round answers to three decimal places.) a. b. + ($ Which independent variable, direct labor hours or machine hours, is a better predictor of factory overhead cost? ◆ d. Assuming that expected January 2019 machine hours are 150, what is expected factory overhead cost using the cost formula in requirement a? (Note: Round to the nearest dollar.)
Transcribed Image Text:b. Using Excel, run a regression on these data using direct labor hours as the independent variable. Provide the cost formula for overhead cost. Round the fixed and variable costs to the nearest cent. x direct labor hours) Total cost = $ c. What is the R² for the regression in requirement a? What is the R² for the regression in requirement b? (Round answers to three decimal places.) a. b. + ($ Which independent variable, direct labor hours or machine hours, is a better predictor of factory overhead cost? ◆ d. Assuming that expected January 2019 machine hours are 150, what is expected factory overhead cost using the cost formula in requirement a? (Note: Round to the nearest dollar.)
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