Least-Squares Regression; Scattergraph; Comparison of Activity Bases [LO 2-4, LO 2-8] The Hard Rock Mining Company is developing cost formulas for management planning and decision-making purposes. The company’s cost analyst has concluded that utilities cost is a mixed cost, and he is attempting to find a base with which the cost might be closely correlated. The controller has suggested that tons mined might be a good base to use in developing a cost formula. The production superintendent disagrees; she thinks that direct labor-hours would be a better base. The cost analyst has decided to try both bases and has assembled the following information: Required: Using tons mined as the independent variable: prepare a scattergraph that plots tons mined on the horizontal axis and utilities cost on the vertical axis. Determine a cost formula for utilities cost using least-squares regression- Express this cost formula in the form Y = a + b X . Using direct labor-hours as the independent variable: prepare a scattergraph that plots direct labor-hours on the horizontal axis and utilities cost on the vertical axis- Determine a cost formula for utilities cost using least-squares regression. Express this cost formula in the form Y = a + b X . Would you recommend that the company use tons mined or direct labor-hours as a base for planning utilities cost?

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Answer 1

Textbook Question

Chapter 2A, Problem 2A.3P

Least-Squares Regression; Scattergraph; Comparison of Activity Bases [LO 2-4, LO 2-8]

The Hard Rock Mining Company is developing cost formulas for management planning and decision-making purposes. The company’s cost analyst has concluded that utilities cost is a mixed cost, and he is attempting to find a base with which the cost might be closely correlated. The controller has suggested that tons mined might be a good base to use in developing a cost formula. The production superintendent disagrees; she thinks that direct labor-hours would be a better base. The cost analyst has decided to try both bases and has assembled the following information:

Chapter 2A, Problem 2A.3P, Least-Squares Regression; Scattergraph; Comparison of Activity Bases [LO 2-4, LO 2-8] The Hard Rock

Required:

Using tons mined as the independent variable: prepare a scattergraph that plots tons mined on the horizontal axis and utilities cost on the vertical axis. Determine a cost formula for utilities cost using least-squares regression- Express this cost formula in the form Y = a + b X .
Using direct labor-hours as the independent variable: prepare a scattergraph that plots direct labor-hours on the horizontal axis and utilities cost on the vertical axis- Determine a cost formula for utilities cost using least-squares regression. Express this cost formula in the form Y = a + b X .
Would you recommend that the company use tons mined or direct labor-hours as a base for planning utilities cost?

1.

Expert Solution

To determine

Concept Introduction:

Scatter-graph:Scatter-graph implies the visual presentation of data on the graph in which costs are shown on the y-axis and activity level is presented in the x-axis.

Least-square regression: Least square regression method use all the available data to derive the best fitting line which would minimize the sum of squared errors between the data points and the regression line.

To prepare:The scatter diagram using tons mixed and utilities cost and determine cost formula

Explanation of Solution

Managerial Accounting for Managers, Chapter 2A, Problem 2A.3P , additional homework tip 1

The cost formula is Y=28352+2.58X where, Y is the utilities cost and X is the tons mixed.

Thus, the scatter diagram has been prepared, and least square regression has been performed and cost equation has been determined.

2.

Expert Solution

To determine

Concept Introduction:

Scatter-graph:Scatter-graph implies the visual presentation of data on the graph in which costs are shown on the y-axis and activity level is presented in the x-axis.

Least-square regression: Least square regression method use all the available data to derive the best fitting line which would minimize the sum of squared errors between the data points and the regression line

To prepare:The scatter diagram using tons mixed and utilities cost and determine cost formula

Explanation of Solution

Managerial Accounting for Managers, Chapter 2A, Problem 2A.3P , additional homework tip 2

The cost formula is Y=17000+9X where, Y is the utilities cost and X is the direct labor hours Thus, the scatter diagram has been prepared, and least square regression has been performed and cost equation has been determined.

3.

Expert Solution

To determine

Concept Introduction:

Scatter-graph:Scatter-graph implies the visual presentation of data on the graph in which costs are shown on the y-axis and activity level is presented in the x-axis.

Least-square regression: Least square regression method use all the available data to derive the best fitting line which would minimize the sum of squared errors between the data points and the regression line

The activities to be selected as as a base for planning utilities cost

Answer to Problem 2A.3P

Direct labor hours should be taken as a base for planning utilities costs.

Explanation of Solution

The regression coefficient is 0.9346 when direct labor is taken as base whereas it is 0.4668 when tons mined is taken as base. Regression coefficient determines the accuracy with which the costs can be determined. Thus taking direct labor as base, the costs can be determined with 93.46% accuracy whereas the accuracy percentage is only 46.68% when tons mined are taken as base. Thus, the activity to be taken as a base for planning utilities cost has been determined.

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Answer 2

Textbook Question

Chapter 2A, Problem 2A.3P

Least-Squares Regression; Scattergraph; Comparison of Activity Bases [LO 2-4, LO 2-8]

The Hard Rock Mining Company is developing cost formulas for management planning and decision-making purposes. The company’s cost analyst has concluded that utilities cost is a mixed cost, and he is attempting to find a base with which the cost might be closely correlated. The controller has suggested that tons mined might be a good base to use in developing a cost formula. The production superintendent disagrees; she thinks that direct labor-hours would be a better base. The cost analyst has decided to try both bases and has assembled the following information:

Chapter 2A, Problem 2A.3P, Least-Squares Regression; Scattergraph; Comparison of Activity Bases [LO 2-4, LO 2-8] The Hard Rock

Required:

Using tons mined as the independent variable: prepare a scattergraph that plots tons mined on the horizontal axis and utilities cost on the vertical axis. Determine a cost formula for utilities cost using least-squares regression- Express this cost formula in the form Y = a + b X .
Using direct labor-hours as the independent variable: prepare a scattergraph that plots direct labor-hours on the horizontal axis and utilities cost on the vertical axis- Determine a cost formula for utilities cost using least-squares regression. Express this cost formula in the form Y = a + b X .
Would you recommend that the company use tons mined or direct labor-hours as a base for planning utilities cost?

1.

Expert Solution

To determine

Concept Introduction:

Scatter-graph:Scatter-graph implies the visual presentation of data on the graph in which costs are shown on the y-axis and activity level is presented in the x-axis.

Least-square regression: Least square regression method use all the available data to derive the best fitting line which would minimize the sum of squared errors between the data points and the regression line.

To prepare:The scatter diagram using tons mixed and utilities cost and determine cost formula

Explanation of Solution

Managerial Accounting for Managers, Chapter 2A, Problem 2A.3P , additional homework tip 1

The cost formula is Y=28352+2.58X where, Y is the utilities cost and X is the tons mixed.

Thus, the scatter diagram has been prepared, and least square regression has been performed and cost equation has been determined.

2.

Expert Solution

To determine

Concept Introduction:

Scatter-graph:Scatter-graph implies the visual presentation of data on the graph in which costs are shown on the y-axis and activity level is presented in the x-axis.

Least-square regression: Least square regression method use all the available data to derive the best fitting line which would minimize the sum of squared errors between the data points and the regression line

To prepare:The scatter diagram using tons mixed and utilities cost and determine cost formula

Explanation of Solution

Managerial Accounting for Managers, Chapter 2A, Problem 2A.3P , additional homework tip 2

The cost formula is Y=17000+9X where, Y is the utilities cost and X is the direct labor hours Thus, the scatter diagram has been prepared, and least square regression has been performed and cost equation has been determined.

3.

Expert Solution

To determine

Concept Introduction:

Scatter-graph:Scatter-graph implies the visual presentation of data on the graph in which costs are shown on the y-axis and activity level is presented in the x-axis.

Least-square regression: Least square regression method use all the available data to derive the best fitting line which would minimize the sum of squared errors between the data points and the regression line

The activities to be selected as as a base for planning utilities cost

Answer to Problem 2A.3P

Direct labor hours should be taken as a base for planning utilities costs.

Explanation of Solution

The regression coefficient is 0.9346 when direct labor is taken as base whereas it is 0.4668 when tons mined is taken as base. Regression coefficient determines the accuracy with which the costs can be determined. Thus taking direct labor as base, the costs can be determined with 93.46% accuracy whereas the accuracy percentage is only 46.68% when tons mined are taken as base. Thus, the activity to be taken as a base for planning utilities cost has been determined.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Textbook Question

Chapter 2A, Problem 2A.3P

Least-Squares Regression; Scattergraph; Comparison of Activity Bases [LO 2-4, LO 2-8]

The Hard Rock Mining Company is developing cost formulas for management planning and decision-making purposes. The company’s cost analyst has concluded that utilities cost is a mixed cost, and he is attempting to find a base with which the cost might be closely correlated. The controller has suggested that tons mined might be a good base to use in developing a cost formula. The production superintendent disagrees; she thinks that direct labor-hours would be a better base. The cost analyst has decided to try both bases and has assembled the following information:

Chapter 2A, Problem 2A.3P, Least-Squares Regression; Scattergraph; Comparison of Activity Bases [LO 2-4, LO 2-8] The Hard Rock

Required:

Using tons mined as the independent variable: prepare a scattergraph that plots tons mined on the horizontal axis and utilities cost on the vertical axis. Determine a cost formula for utilities cost using least-squares regression- Express this cost formula in the form Y = a + b X .
Using direct labor-hours as the independent variable: prepare a scattergraph that plots direct labor-hours on the horizontal axis and utilities cost on the vertical axis- Determine a cost formula for utilities cost using least-squares regression. Express this cost formula in the form Y = a + b X .
Would you recommend that the company use tons mined or direct labor-hours as a base for planning utilities cost?

1.

Expert Solution

To determine

Concept Introduction:

Scatter-graph:Scatter-graph implies the visual presentation of data on the graph in which costs are shown on the y-axis and activity level is presented in the x-axis.

Least-square regression: Least square regression method use all the available data to derive the best fitting line which would minimize the sum of squared errors between the data points and the regression line.

To prepare:The scatter diagram using tons mixed and utilities cost and determine cost formula

Explanation of Solution

Managerial Accounting for Managers, Chapter 2A, Problem 2A.3P , additional homework tip 1

The cost formula is Y=28352+2.58X where, Y is the utilities cost and X is the tons mixed.

Thus, the scatter diagram has been prepared, and least square regression has been performed and cost equation has been determined.

2.

Expert Solution

To determine

Concept Introduction:

Scatter-graph:Scatter-graph implies the visual presentation of data on the graph in which costs are shown on the y-axis and activity level is presented in the x-axis.

Least-square regression: Least square regression method use all the available data to derive the best fitting line which would minimize the sum of squared errors between the data points and the regression line

To prepare:The scatter diagram using tons mixed and utilities cost and determine cost formula

Explanation of Solution

Managerial Accounting for Managers, Chapter 2A, Problem 2A.3P , additional homework tip 2

The cost formula is Y=17000+9X where, Y is the utilities cost and X is the direct labor hours Thus, the scatter diagram has been prepared, and least square regression has been performed and cost equation has been determined.

3.

Expert Solution

To determine

Concept Introduction:

Scatter-graph:Scatter-graph implies the visual presentation of data on the graph in which costs are shown on the y-axis and activity level is presented in the x-axis.

Least-square regression: Least square regression method use all the available data to derive the best fitting line which would minimize the sum of squared errors between the data points and the regression line

The activities to be selected as as a base for planning utilities cost

Answer to Problem 2A.3P

Direct labor hours should be taken as a base for planning utilities costs.

Explanation of Solution

The regression coefficient is 0.9346 when direct labor is taken as base whereas it is 0.4668 when tons mined is taken as base. Regression coefficient determines the accuracy with which the costs can be determined. Thus taking direct labor as base, the costs can be determined with 93.46% accuracy whereas the accuracy percentage is only 46.68% when tons mined are taken as base. Thus, the activity to be taken as a base for planning utilities cost has been determined.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Textbook Question

Chapter 2A, Problem 2A.3P

Least-Squares Regression; Scattergraph; Comparison of Activity Bases [LO 2-4, LO 2-8]

The Hard Rock Mining Company is developing cost formulas for management planning and decision-making purposes. The company’s cost analyst has concluded that utilities cost is a mixed cost, and he is attempting to find a base with which the cost might be closely correlated. The controller has suggested that tons mined might be a good base to use in developing a cost formula. The production superintendent disagrees; she thinks that direct labor-hours would be a better base. The cost analyst has decided to try both bases and has assembled the following information:

Chapter 2A, Problem 2A.3P, Least-Squares Regression; Scattergraph; Comparison of Activity Bases [LO 2-4, LO 2-8] The Hard Rock

Required:

Using tons mined as the independent variable: prepare a scattergraph that plots tons mined on the horizontal axis and utilities cost on the vertical axis. Determine a cost formula for utilities cost using least-squares regression- Express this cost formula in the form Y = a + b X .
Using direct labor-hours as the independent variable: prepare a scattergraph that plots direct labor-hours on the horizontal axis and utilities cost on the vertical axis- Determine a cost formula for utilities cost using least-squares regression. Express this cost formula in the form Y = a + b X .
Would you recommend that the company use tons mined or direct labor-hours as a base for planning utilities cost?

1.

Expert Solution

To determine

Concept Introduction:

Scatter-graph:Scatter-graph implies the visual presentation of data on the graph in which costs are shown on the y-axis and activity level is presented in the x-axis.

Least-square regression: Least square regression method use all the available data to derive the best fitting line which would minimize the sum of squared errors between the data points and the regression line.

To prepare:The scatter diagram using tons mixed and utilities cost and determine cost formula

Explanation of Solution

Managerial Accounting for Managers, Chapter 2A, Problem 2A.3P , additional homework tip 1

The cost formula is Y=28352+2.58X where, Y is the utilities cost and X is the tons mixed.

Thus, the scatter diagram has been prepared, and least square regression has been performed and cost equation has been determined.

2.

Expert Solution

To determine

Concept Introduction:

Scatter-graph:Scatter-graph implies the visual presentation of data on the graph in which costs are shown on the y-axis and activity level is presented in the x-axis.

Least-square regression: Least square regression method use all the available data to derive the best fitting line which would minimize the sum of squared errors between the data points and the regression line

To prepare:The scatter diagram using tons mixed and utilities cost and determine cost formula

Explanation of Solution

Managerial Accounting for Managers, Chapter 2A, Problem 2A.3P , additional homework tip 2

The cost formula is Y=17000+9X where, Y is the utilities cost and X is the direct labor hours Thus, the scatter diagram has been prepared, and least square regression has been performed and cost equation has been determined.

3.

Expert Solution

To determine

Concept Introduction:

Scatter-graph:Scatter-graph implies the visual presentation of data on the graph in which costs are shown on the y-axis and activity level is presented in the x-axis.

Least-square regression: Least square regression method use all the available data to derive the best fitting line which would minimize the sum of squared errors between the data points and the regression line

The activities to be selected as as a base for planning utilities cost

Answer to Problem 2A.3P

Direct labor hours should be taken as a base for planning utilities costs.

Explanation of Solution

The regression coefficient is 0.9346 when direct labor is taken as base whereas it is 0.4668 when tons mined is taken as base. Regression coefficient determines the accuracy with which the costs can be determined. Thus taking direct labor as base, the costs can be determined with 93.46% accuracy whereas the accuracy percentage is only 46.68% when tons mined are taken as base. Thus, the activity to be taken as a base for planning utilities cost has been determined.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Textbook Question

Answer 6

Textbook Question

Answer 7

1.

Expert Solution

To determine

Concept Introduction:

Scatter-graph:Scatter-graph implies the visual presentation of data on the graph in which costs are shown on the y-axis and activity level is presented in the x-axis.

Least-square regression: Least square regression method use all the available data to derive the best fitting line which would minimize the sum of squared errors between the data points and the regression line.

To prepare:The scatter diagram using tons mixed and utilities cost and determine cost formula

Explanation of Solution

Managerial Accounting for Managers, Chapter 2A, Problem 2A.3P , additional homework tip 1

The cost formula is Y=28352+2.58X where, Y is the utilities cost and X is the tons mixed.

Thus, the scatter diagram has been prepared, and least square regression has been performed and cost equation has been determined.

2.

Expert Solution

To determine

Concept Introduction:

Scatter-graph:Scatter-graph implies the visual presentation of data on the graph in which costs are shown on the y-axis and activity level is presented in the x-axis.

Least-square regression: Least square regression method use all the available data to derive the best fitting line which would minimize the sum of squared errors between the data points and the regression line

To prepare:The scatter diagram using tons mixed and utilities cost and determine cost formula

Explanation of Solution

Managerial Accounting for Managers, Chapter 2A, Problem 2A.3P , additional homework tip 2

The cost formula is Y=17000+9X where, Y is the utilities cost and X is the direct labor hours Thus, the scatter diagram has been prepared, and least square regression has been performed and cost equation has been determined.

3.

Expert Solution

To determine

Concept Introduction:

Scatter-graph:Scatter-graph implies the visual presentation of data on the graph in which costs are shown on the y-axis and activity level is presented in the x-axis.

Least-square regression: Least square regression method use all the available data to derive the best fitting line which would minimize the sum of squared errors between the data points and the regression line

The activities to be selected as as a base for planning utilities cost

Answer to Problem 2A.3P

Direct labor hours should be taken as a base for planning utilities costs.

Explanation of Solution

The regression coefficient is 0.9346 when direct labor is taken as base whereas it is 0.4668 when tons mined is taken as base. Regression coefficient determines the accuracy with which the costs can be determined. Thus taking direct labor as base, the costs can be determined with 93.46% accuracy whereas the accuracy percentage is only 46.68% when tons mined are taken as base. Thus, the activity to be taken as a base for planning utilities cost has been determined.

Answer 8

1.

Expert Solution

To determine

Concept Introduction:

Scatter-graph:Scatter-graph implies the visual presentation of data on the graph in which costs are shown on the y-axis and activity level is presented in the x-axis.

Least-square regression: Least square regression method use all the available data to derive the best fitting line which would minimize the sum of squared errors between the data points and the regression line.

To prepare:The scatter diagram using tons mixed and utilities cost and determine cost formula

Explanation of Solution

Managerial Accounting for Managers, Chapter 2A, Problem 2A.3P , additional homework tip 1

The cost formula is Y=28352+2.58X where, Y is the utilities cost and X is the tons mixed.

Thus, the scatter diagram has been prepared, and least square regression has been performed and cost equation has been determined.

Answer 9

1.

Expert Solution

Answer 10

1.

Expert Solution

Answer 11

Expert Solution

Answer 12

To determine

Concept Introduction:

Scatter-graph:Scatter-graph implies the visual presentation of data on the graph in which costs are shown on the y-axis and activity level is presented in the x-axis.

Least-square regression: Least square regression method use all the available data to derive the best fitting line which would minimize the sum of squared errors between the data points and the regression line.

To prepare:The scatter diagram using tons mixed and utilities cost and determine cost formula

Answer 13

Explanation of Solution

Managerial Accounting for Managers, Chapter 2A, Problem 2A.3P , additional homework tip 1

The cost formula is Y=28352+2.58X where, Y is the utilities cost and X is the tons mixed.

Thus, the scatter diagram has been prepared, and least square regression has been performed and cost equation has been determined.

Answer 14

2.

Expert Solution

To determine

Concept Introduction:

Scatter-graph:Scatter-graph implies the visual presentation of data on the graph in which costs are shown on the y-axis and activity level is presented in the x-axis.

Least-square regression: Least square regression method use all the available data to derive the best fitting line which would minimize the sum of squared errors between the data points and the regression line

To prepare:The scatter diagram using tons mixed and utilities cost and determine cost formula

Explanation of Solution

Managerial Accounting for Managers, Chapter 2A, Problem 2A.3P , additional homework tip 2

The cost formula is Y=17000+9X where, Y is the utilities cost and X is the direct labor hours Thus, the scatter diagram has been prepared, and least square regression has been performed and cost equation has been determined.

Answer 15

2.

Expert Solution

Answer 16

2.

Expert Solution

Answer 17

Expert Solution

Answer 18

To determine

Concept Introduction:

Scatter-graph:Scatter-graph implies the visual presentation of data on the graph in which costs are shown on the y-axis and activity level is presented in the x-axis.

Least-square regression: Least square regression method use all the available data to derive the best fitting line which would minimize the sum of squared errors between the data points and the regression line

To prepare:The scatter diagram using tons mixed and utilities cost and determine cost formula

Answer 19

Explanation of Solution

Managerial Accounting for Managers, Chapter 2A, Problem 2A.3P , additional homework tip 2

The cost formula is Y=17000+9X where, Y is the utilities cost and X is the direct labor hours Thus, the scatter diagram has been prepared, and least square regression has been performed and cost equation has been determined.

Answer 20

3.

Expert Solution

To determine

Concept Introduction:

Scatter-graph:Scatter-graph implies the visual presentation of data on the graph in which costs are shown on the y-axis and activity level is presented in the x-axis.

Least-square regression: Least square regression method use all the available data to derive the best fitting line which would minimize the sum of squared errors between the data points and the regression line

The activities to be selected as as a base for planning utilities cost

Answer to Problem 2A.3P

Direct labor hours should be taken as a base for planning utilities costs.

Explanation of Solution

The regression coefficient is 0.9346 when direct labor is taken as base whereas it is 0.4668 when tons mined is taken as base. Regression coefficient determines the accuracy with which the costs can be determined. Thus taking direct labor as base, the costs can be determined with 93.46% accuracy whereas the accuracy percentage is only 46.68% when tons mined are taken as base. Thus, the activity to be taken as a base for planning utilities cost has been determined.

Answer 21

3.

Expert Solution

Answer 22

3.

Expert Solution

Answer 23

Expert Solution

Answer 24

To determine

Concept Introduction:

Scatter-graph:Scatter-graph implies the visual presentation of data on the graph in which costs are shown on the y-axis and activity level is presented in the x-axis.

Least-square regression: Least square regression method use all the available data to derive the best fitting line which would minimize the sum of squared errors between the data points and the regression line

The activities to be selected as as a base for planning utilities cost

Answer 25

Answer to Problem 2A.3P

Direct labor hours should be taken as a base for planning utilities costs.

Answer 26

Explanation of Solution

The regression coefficient is 0.9346 when direct labor is taken as base whereas it is 0.4668 when tons mined is taken as base. Regression coefficient determines the accuracy with which the costs can be determined. Thus taking direct labor as base, the costs can be determined with 93.46% accuracy whereas the accuracy percentage is only 46.68% when tons mined are taken as base. Thus, the activity to be taken as a base for planning utilities cost has been determined.

Answer 27

Ch. 2A - Least-Squares Regression; Scattergraph; Comparison...

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Explanation of Solution

Explanation of Solution

Answer to Problem 2A.3P

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