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) Compute by and bo (to 1 decimal). b₁ bo 400 450 550 600 700 750 a. Use these data to develop an estimated regression equation that could be used to predict the total cost for a given production volume. Do not round intermediate calculations. Complete the estimated regression equation (to 1 decimal). Do not round intermediate calculations. ŷ = + Total Cost ($) 4,000 5,000 5,400 5,900 6,400 7,000 b. What is the variable cost per unit produced (to 2 decimal)? Do not round intermediate calculations $ c. Compute the coefficient of determination (to 3 decimals). Do not round intermediate calculations. Note: report 2 between 0 and 1. p² = What percentage of the variation in total cost can be explained by the production volume (to 1 decimal)? Do not round intermediate calculations % d. The company's production schedule shows 500 units must be produced next month. Predict the total cost for this operation (to the nearest whole number). Do not round intermediate calculations $

MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
icon
Related questions
Question
100%
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)
400
450
550
Compute bi and bo (to 1 decimal). b₁
bo
600
700
750
a. Use these data to develop an estimated regression equation that could be used to predict the total cost for a given production volume. Do not round intermediate calculations.
Complete the estimated regression equation (to 1 decimal). Do not round intermediate calculations
ŷ =
+
I
Total Cost ($)
4,000
5,000
5,400
5,900
6,400
7,000
b. What is the variable cost per unit produced (to 2 decimal)? Do not round intermediate calculations
$
c. Compute the coefficient of determination (to 3 decimals). Do not round intermediate calculations. Note: report ² between 0 and 1.
p² =
What percentage of the variation in total cost can be explained by the production volume (to 1 decimal)? Do not round intermediate calculations
%
d. The company's production schedule shows 500 units must be produced next month. Predict the total cost for this operation (to the nearest whole number). Do not round intermediate calculations
$
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) 400 450 550 Compute bi and bo (to 1 decimal). b₁ bo 600 700 750 a. Use these data to develop an estimated regression equation that could be used to predict the total cost for a given production volume. Do not round intermediate calculations. Complete the estimated regression equation (to 1 decimal). Do not round intermediate calculations ŷ = + I Total Cost ($) 4,000 5,000 5,400 5,900 6,400 7,000 b. What is the variable cost per unit produced (to 2 decimal)? Do not round intermediate calculations $ c. Compute the coefficient of determination (to 3 decimals). Do not round intermediate calculations. Note: report ² between 0 and 1. p² = What percentage of the variation in total cost can be explained by the production volume (to 1 decimal)? Do not round intermediate calculations % d. The company's production schedule shows 500 units must be produced next month. Predict the total cost for this operation (to the nearest whole number). Do not round intermediate calculations $
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 6 steps with 6 images

Blurred answer
Similar questions
Recommended textbooks for you
MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
Statistics
ISBN:
9781119256830
Author:
Amos Gilat
Publisher:
John Wiley & Sons Inc
Probability and Statistics for Engineering and th…
Probability and Statistics for Engineering and th…
Statistics
ISBN:
9781305251809
Author:
Jay L. Devore
Publisher:
Cengage Learning
Statistics for The Behavioral Sciences (MindTap C…
Statistics for The Behavioral Sciences (MindTap C…
Statistics
ISBN:
9781305504912
Author:
Frederick J Gravetter, Larry B. Wallnau
Publisher:
Cengage Learning
Elementary Statistics: Picturing the World (7th E…
Elementary Statistics: Picturing the World (7th E…
Statistics
ISBN:
9780134683416
Author:
Ron Larson, Betsy Farber
Publisher:
PEARSON
The Basic Practice of Statistics
The Basic Practice of Statistics
Statistics
ISBN:
9781319042578
Author:
David S. Moore, William I. Notz, Michael A. Fligner
Publisher:
W. H. Freeman
Introduction to the Practice of Statistics
Introduction to the Practice of Statistics
Statistics
ISBN:
9781319013387
Author:
David S. Moore, George P. McCabe, Bruce A. Craig
Publisher:
W. H. Freeman