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 ($)4004,7004505,7005506,1006006,6007007,1007507,700Compute b1 and b0 (to 1 decimal)b1 b0 Complete the estimated regression equation (to 1 decimal). = + xWhat is the variable cost per unit produced (to 1 decimal)?$Compute the coefficient of determination (to 3 decimals). Note: report r2 between 0 and 1.r2 = What percentage of the variation in total cost can be explained by the production volume (to 1 decimal)? %The company's production schedule shows 500 units must be produced next month. What is the estimated total cost for this operation (to the nearest whole number)?$

Answered: Image /qna-images/answer/b182e996-463a-4a0d-8391-d775984c8093.jpg

Answered: An important application of regression…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

See similar textbooks

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)	Total Cost ($)
400	4,700
450	5,700
550	6,100
600	6,600
700	7,100
750	7,700

Compute b₁ and b₀ (to 1 decimal)
b₁
b₀

Complete the estimated regression equation (to 1 decimal).
= + x
What is the variable cost per unit produced (to 1 decimal)?
$
Compute the coefficient of determination (to 3 decimals). Note: report r² between 0 and 1.
r² =

What percentage of the variation in total cost can be explained by the production volume (to 1 decimal)?
%
The company's production schedule shows 500 units must be produced next month. What is the estimated total cost for this operation (to the nearest whole number)?
$