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(16 DeMarco Company is developing a cost formula for its packing activity. Discussion with the workers in the Packing Department has revealed that packing costs are associated with the number of customer orders, the size of the orders, and the relative fraglity of the Items (more fragile items must be specially wrapped in bubble wrap and Styrofoam). Data for the past 20 months have been gathered: Packing Cost Number Weight of Orders Number of Month of Orders Fragile Items 1 S 45,000 11,200 24,640 31,220 1.120 2 58,000 14,000 1,400 3 39,000 10,500 18,000 1,000 35.600 9.000 19,350 850 4,000 90,000 126,000 90,600 63,000 79,000 155,000 21,000 46,200 31,000 64,000 60,000 5,500 1,800 750 7 20,000 15,000 16,000 40,000 8 40,000 59,000 1,500 88,000 249,700 10 2,500 11,800 14,000 900 11 450,000 113,500 12 13 640,000 41,000 54,000 58,000 58,090 80,110 123,000 108,000 76,000 150,000 390,000 10,000 14,000 15,000 14,500 23,000 29,400 30,000 31,900 50,000 14 890 15 1,500 1,340 3,000 2,000 1,900 16 17 18,000 18 30,000 75,000 19 63,450 27,000 18,000 20 41,400 1,430 Required: Using the method of least squares, run a regression using the number of orders as the independent variable. Run a multiple regression using three independent variables: the number of orders, the weight of orders, and the number of fragile items. Which regression equation is better? Why? Predict the total packing cost for 25,000 orders, weighing 40,000 pounds, with 4,000 fragile items. How much would the cost estimated for Requirement 3 change if the 25,000 orders weighed 40,000 pounds, but only 2,000 were fragile items?

(16 DeMarco Company is developing a cost formula for its packing activity. Discussion with the workers in the Packing Department has revealed that packing costs are associated with the number of customer orders, the size of the orders, and the relative fraglity of the Items (more fragile items must be specially wrapped in bubble wrap and Styrofoam). Data for the past 20 months have been gathered: Packing Cost Number Weight of Orders Number of Month of Orders Fragile Items 1 S 45,000 11,200 24,640 31,220 1.120 2 58,000 14,000 1,400 3 39,000 10,500 18,000 1,000 35.600 9.000 19,350 850 4,000 90,000 126,000 90,600 63,000 79,000 155,000 21,000 46,200 31,000 64,000 60,000 5,500 1,800 750 7 20,000 15,000 16,000 40,000 8 40,000 59,000 1,500 88,000 249,700 10 2,500 11,800 14,000 900 11 450,000 113,500 12 13 640,000 41,000 54,000 58,000 58,090 80,110 123,000 108,000 76,000 150,000 390,000 10,000 14,000 15,000 14,500 23,000 29,400 30,000 31,900 50,000 14 890 15 1,500 1,340 3,000 2,000 1,900 16 17 18,000 18 30,000 75,000 19 63,450 27,000 18,000 20 41,400 1,430 Required: Using the method of least squares, run a regression using the number of orders as the independent variable. Run a multiple regression using three independent variables: the number of orders, the weight of orders, and the number of fragile items. Which regression equation is better? Why? Predict the total packing cost for 25,000 orders, weighing 40,000 pounds, with 4,000 fragile items. How much would the cost estimated for Requirement 3 change if the 25,000 orders weighed 40,000 pounds, but only 2,000 were fragile items?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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(16 DeMarco Company is developing a cost formula for its packing activity. Discussion with the workers in the Packing Department has revealed that packing costs are associated with the number of customer orders, the size of the orders, and the relative fraglity of the Items (more fragile items must be specially wrapped in bubble wrap and Styrofoam). Data for the past 20 months have been gathered: Packing Cost Number Weight of Orders Number of Month of Orders Fragile Items 1 S 45,000 11,200 24,640 31,220 1.120 2 58,000 14,000 1,400 3 39,000 10,500 18,000 1,000 35.600 9.000 19,350 850 4,000 90,000 126,000 90,600 63,000 79,000 155,000 21,000 46,200 31,000 64,000 60,000 5,500 1,800 750 7 20,000 15,000 16,000 40,000 8 40,000 59,000 1,500 88,000 249,700 10 2,500 11,800 14,000 900 11 450,000 113,500 12 13 640,000 41,000 54,000 58,000 58,090 80,110 123,000 108,000 76,000 150,000 390,000 10,000 14,000 15,000 14,500 23,000 29,400 30,000 31,900 50,000 14 890 15 1,500 1,340 3,000 2,000 1,900 16 17 18,000 18 30,000 75,000 19 63,450 27,000 18,000 20 41,400 1,430 Required: Using the method of least squares, run a regression using the number of orders as the independent variable. Run a multiple regression using three independent variables: the number of orders, the weight of orders, and the number of fragile items. Which regression equation is better? Why? Predict the total packing cost for 25,000 orders, weighing 40,000 pounds, with 4,000 fragile items. How much would the cost estimated for Requirement 3 change if the 25,000 orders weighed 40,000 pounds, but only 2,000 were fragile items?
Transcribed Image Text:(16 DeMarco Company is developing a cost formula for its packing activity. Discussion with the workers in the Packing Department has revealed that packing costs are associated with the number of customer orders, the size of the orders, and the relative fraglity of the Items (more fragile items must be specially wrapped in bubble wrap and Styrofoam). Data for the past 20 months have been gathered: Packing Cost Number Weight of Orders Number of Month of Orders Fragile Items 1 S 45,000 11,200 24,640 31,220 1.120 2 58,000 14,000 1,400 3 39,000 10,500 18,000 1,000 35.600 9.000 19,350 850 4,000 90,000 126,000 90,600 63,000 79,000 155,000 21,000 46,200 31,000 64,000 60,000 5,500 1,800 750 7 20,000 15,000 16,000 40,000 8 40,000 59,000 1,500 88,000 249,700 10 2,500 11,800 14,000 900 11 450,000 113,500 12 13 640,000 41,000 54,000 58,000 58,090 80,110 123,000 108,000 76,000 150,000 390,000 10,000 14,000 15,000 14,500 23,000 29,400 30,000 31,900 50,000 14 890 15 1,500 1,340 3,000 2,000 1,900 16 17 18,000 18 30,000 75,000 19 63,450 27,000 18,000 20 41,400 1,430 Required: Using the method of least squares, run a regression using the number of orders as the independent variable. Run a multiple regression using three independent variables: the number of orders, the weight of orders, and the number of fragile items. Which regression equation is better? Why? Predict the total packing cost for 25,000 orders, weighing 40,000 pounds, with 4,000 fragile items. How much would the cost estimated for Requirement 3 change if the 25,000 orders weighed 40,000 pounds, but only 2,000 were fragile items?
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