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 ($) 450 4100 500 4600 600 5100 700 5700 800 6100 850 6900 The data on the production volume and total cost y for particular manufacturing operation were used to develop the estimated regression equation y=1341.67+ 6.27x. a. The company's production schedule shows that 750 units must be produced next month. Predict the total cost for next month. มิ* - (to 2 decimals) b. Develop a 98% prediction interval for the total cost for next month. (to 2 decimals) t-value 8 pred (to 3 decimals) (to 2 decimals) Prediction Interval for an individual Value next month ) (to whole number) c. If an accounting cost report at the end of next month shows that the actual production cost during the month was $6,000, should managers be concerned about incurring such a high total cost for the month? Discuss. Based on one month, $6,000 high costs should cause concern, Select your answer-outside the upper limit of the prediction interval. A sequence of five to seven months with consistently
An important application of regression analysis in accounting is in the estimation of cost. By collecting data on volume and cost and using the least squares method to develop an estimated regression equation relating volume and cost, an accountant can estimate the cost associated with a particular manufacturing volume. Consider the following sample of production volumes and total cost data for a manufacturing operation. Production Volume (units) Total Cost ($) 450 4100 500 4600 600 5100 700 5700 800 6100 850 6900 The data on the production volume and total cost y for particular manufacturing operation were used to develop the estimated regression equation y=1341.67+ 6.27x. a. The company's production schedule shows that 750 units must be produced next month. Predict the total cost for next month. มิ* - (to 2 decimals) b. Develop a 98% prediction interval for the total cost for next month. (to 2 decimals) t-value 8 pred (to 3 decimals) (to 2 decimals) Prediction Interval for an individual Value next month ) (to whole number) c. If an accounting cost report at the end of next month shows that the actual production cost during the month was $6,000, should managers be concerned about incurring such a high total cost for the month? Discuss. Based on one month, $6,000 high costs should cause concern, Select your answer-outside the upper limit of the prediction interval. A sequence of five to seven months with consistently
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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Transcribed Image Text:An important application of regression analysis in accounting is in the estimation of cost. By collecting data on volume and cost and using the least squares
method to develop an estimated regression equation relating volume and cost, an accountant can estimate the cost associated with a particular manufacturing
volume. Consider the following sample of production volumes and total cost data for a manufacturing operation.
Production Volume (units)
Total Cost ($)
450
4100
500
4600
600
5100
700
5700
800
6100
850
6900
The data on the production volume and total cost y for particular manufacturing operation were used to develop the estimated regression equation
y=1341.67+ 6.27x.
a. The company's production schedule shows that 750 units must be produced next month. Predict the total cost for next month.
มิ* -
(to 2 decimals)
b. Develop a 98% prediction interval for the total cost for next month.
(to 2 decimals)
t-value
8 pred
(to 3 decimals)
(to 2 decimals)
Prediction Interval for an individual Value next month
) (to whole number)
c. If an accounting cost report at the end of next month shows that the actual production cost during the month was $6,000, should managers be concerned
about incurring such a high total cost for the month? Discuss.
Based on one month, $6,000
high costs should cause concern,
Select your answer-outside the upper limit of the prediction interval. A sequence of five to seven months with consistently
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