5. An important application of regression analysis in accounting is in the estimation of cost. By collecting data on volume and cost and using the least squares method to develop an estimated regression equation relating volume and cost, an accountant can estimate the cost associated with a particular manufacturing volume. Consider the following sample of production volumes and total cost data for a manufacturing operation. Production Volume (units) Total Cost (5) 400 4000 450 5000 550 5400 600 5900 700 6400 750 7000 a) Use these data to develop an estimated regression equation that could be used to predict the total cost for a given production volume. b) What is the variable cost per unit produced? c) Compute the coefficient of determination. What percentage of the variation in total cost can be explained by production volume? d) The company's production schedule shows S00 units must be produced next month. Predict the total cost for this operation?
5. An important application of regression analysis in accounting is in the estimation of cost. By collecting data on volume and cost and using the least squares method to develop an estimated regression equation relating volume and cost, an accountant can estimate the cost associated with a particular manufacturing volume. Consider the following sample of production volumes and total cost data for a manufacturing operation. Production Volume (units) Total Cost (5) 400 4000 450 5000 550 5400 600 5900 700 6400 750 7000 a) Use these data to develop an estimated regression equation that could be used to predict the total cost for a given production volume. b) What is the variable cost per unit produced? c) Compute the coefficient of determination. What percentage of the variation in total cost can be explained by production volume? d) The company's production schedule shows S00 units must be produced next month. Predict the total cost for this operation?
Algebra & Trigonometry with Analytic Geometry
13th Edition
ISBN:9781133382119
Author:Swokowski
Publisher:Swokowski
Chapter3: Functions And Graphs
Section3.3: Lines
Problem 76E
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5. An important application of regression analysis in accounting is in the
estimation of cost. By collecting data on volume and cost and using the least
squares method to develop an estimated regression equation relating volume and
cost, an accountant can estimate the cost associated with a particular
manufacturing volume. Consider the following sample of production volumes and
total cost data for a manufacturing operation.
Production Volume (units)
Total Cost ($)
400
4000
LockDown
Browser
450
5000
7:42 PM
EPIC
R.
W
11/2/2020
550
5400
600
5900
700
6400
750
7000
a) Use these data to develop an estimated regression equation that could be
used to predict the total cost for a given production volume.
b) What is the variable cost per unit produced?
c) Compute the coefficient of determination. What percentage of the
variation in total cost can be explained by production volume?
d) The company's production schedule shows 500 units must be produced
next month. Predict the total cost for this operation?
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Transcribed Image Text:Hurlburt Exam 3a Econ 262 - Word
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5. An important application of regression analysis in accounting is in the
estimation of cost. By collecting data on volume and cost and using the least
squares method to develop an estimated regression equation relating volume and
cost, an accountant can estimate the cost associated with a particular
manufacturing volume. Consider the following sample of production volumes and
total cost data for a manufacturing operation.
Production Volume (units)
Total Cost ($)
400
4000
LockDown
Browser
450
5000
7:42 PM
EPIC
R.
W
11/2/2020
550
5400
600
5900
700
6400
750
7000
a) Use these data to develop an estimated regression equation that could be
used to predict the total cost for a given production volume.
b) What is the variable cost per unit produced?
c) Compute the coefficient of determination. What percentage of the
variation in total cost can be explained by production volume?
d) The company's production schedule shows 500 units must be produced
next month. Predict the total cost for this operation?
Page 3 of 5
720 words
Display Settings
180%
E
7:42 PM
O Type here to search
EPIC
R.
GAMES
11/2/2020
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