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Ah Importaht application of régression 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 Total Cost (units) ($) 400 4,100 450 5,000 550 5,400 600 6,000 700 6,500 750 7,100 (a) Use these data to develop an estimated regression equation that could be used to predict the total cost for a given production volume. (Round your numerical values to two decimal places.) (b) What is the variable cost (in dollars) per unit produced? $ (c) Compute the coefficient of determination. (Round your answer to three decimal places.) What percentage of the variation in total cost can be explained by production volume? (Round your answer to one decimal plac

Ah Importaht application of régression 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 Total Cost (units) ($) 400 4,100 450 5,000 550 5,400 600 6,000 700 6,500 750 7,100 (a) Use these data to develop an estimated regression equation that could be used to predict the total cost for a given production volume. (Round your numerical values to two decimal places.) (b) What is the variable cost (in dollars) per unit produced? $ (c) Compute the coefficient of determination. (Round your answer to three decimal places.) What percentage of the variation in total cost can be explained by production volume? (Round your answer to one decimal plac

Elementary Linear Algebra (MindTap Course List)
Elementary Linear Algebra (MindTap Course List)
8th Edition
ISBN:9781305658004
Author:Ron Larson
Publisher:Ron Larson
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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 Total Cost (units) ($) 400 4,100 450 5,000 550 5,400 600 6,000 700 6,500 750 7,100 (a) Use these data volume. (Round your numerical values to two decimal places.) develop an estimated regression equation that could be used to predict the total cost for a given production (b) What is the variable cost (in dollars) per unit produced? 24 (c) Compute the coefficient of determination. (Round your answer to three decimal places.) What percentage of the variation in total cost can be explained by production volume? (Round your answer to one decimal place.) (d) The company's production schedule shows 650 units must be produced next month. Predict the total cost (in dollars) for this operation. (Round your answer to the nearest cent.) 2$
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 Total Cost (units) ($) 400 4,100 450 5,000 550 5,400 600 6,000 700 6,500 750 7,100 (a) Use these data volume. (Round your numerical values to two decimal places.) develop an estimated regression equation that could be used to predict the total cost for a given production (b) What is the variable cost (in dollars) per unit produced? 24 (c) Compute the coefficient of determination. (Round your answer to three decimal places.) What percentage of the variation in total cost can be explained by production volume? (Round your answer to one decimal place.) (d) The company's production schedule shows 650 units must be produced next month. Predict the total cost (in dollars) for this operation. (Round your answer to the nearest cent.) 2$
Expert Solution
Step 1

From the given data set

( a )

Regression equation

( 2 )

Variable cost per unit produced = ?

( c )

Coefficient of determination =?

( d )

 

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