XYZ Company's accountant is estimating next period's total overhead costs (Y). She performed three regression analyses, the first is based on direct labor hours (DLH), the second is based on machine hours (Mhr), and the third is based on quantity produced (Q). The results were: [Y=$95,000 + $9×DLH; R-square = 0.85]; [Y= $120,000 + $5xMhr; R-square 0.15]; [Y=190,000+2Q; R-square=0.45]. How much of the variations on the overhead costs is explained by the quantity produced (Q)? Select one: O a. 15% O b. None of the answers given O c. 55% O d. 85% e. 45%

XYZ Company's accountant is estimating next period's total overhead costs (Y). She performed three regression analyses, the first is based on direct labor hours (DLH), the second is based on machine hours (Mhr), and the third is based on quantity produced (Q). The results were: [Y=$95,000 + $9×DLH; R-square = 0.85]; [Y= $120,000 + $5xMhr; R-square 0.15]; [Y=190,000+2Q; R-square=0.45]. How much of the variations on the overhead costs is explained by the quantity produced (Q)? Select one: O a. 15% O b. None of the answers given O c. 55% O d. 85% e. 45%

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter4A: Problems In Applying The Linear Regression Model

Section: Chapter Questions

Problem 2E

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