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 regressionequation 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 amanufacturing operation.Production Volume (units)Total Cost ($)400400045050005505400590060070064007000750a. Compute bị and bo (to 2 decimals if necessary).bịboComplete the estimated regression equation (to 2 decimals if necessary).хb. What is the variable cost per unit produced (to 1 decimal)?c. Compute the coefficient of determination (to 4 decimals). Note: report r between 0 and 1.=What percentage of the variation in total cost can be explained by the production volume (to 2 decimals)?d. The company's production schedule shows 500 units must be produced next month. What is the estimated total cost for this operation (to 2 decimals)?

Question
Asked Dec 5, 2019
22 views
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
4000
450
5000
550
5400
5900
600
700
6400
7000
750
a. Compute bị and bo (to 2 decimals if necessary).
bị
bo
Complete the estimated regression equation (to 2 decimals if necessary).
х
b. What is the variable cost per unit produced (to 1 decimal)?
c. Compute the coefficient of determination (to 4 decimals). Note: report r between 0 and 1.
=
What percentage of the variation in total cost can be explained by the production volume (to 2 decimals)?
d. The company's production schedule shows 500 units must be produced next month. What is the estimated total cost for this operation (to 2 decimals)?
help_outline

Image Transcriptionclose

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 4000 450 5000 550 5400 5900 600 700 6400 7000 750 a. Compute bị and bo (to 2 decimals if necessary). bị bo Complete the estimated regression equation (to 2 decimals if necessary). х b. What is the variable cost per unit produced (to 1 decimal)? c. Compute the coefficient of determination (to 4 decimals). Note: report r between 0 and 1. = What percentage of the variation in total cost can be explained by the production volume (to 2 decimals)? d. The company's production schedule shows 500 units must be produced next month. What is the estimated total cost for this operation (to 2 decimals)?

fullscreen
check_circle

Expert Answer

Step 1

a.

Let X be the production volume and Y be the total cost

From the given data

help_outline

Image Transcriptionclose

Y? XY 400 4,000 1,600,000 160,000 16,000,000 450 5,000 5,400 2,250,000 202,500 302,500 25,000,000 550 2,970,000 29,160,000 600 5,900 3,540,000 360,000 34,810,000 700 6,400 4,480,000 5,250,000 490,000 40,960,000 750 7,000 562,500 49,000,000 EX, = 3,450 ΣΥ-3,700 | ΣΧ- 20, 090, 000 |ΣΧ2077,500| ΣΥ -194, 930, 000 %3D i-1 i-1 i-1 i-1 i-1

fullscreen
Step 2

The value of slope (b1) is

help_outline

Image Transcriptionclose

Σχν- Σ<Σ) 4 = ηΣx- (Σx)" 6(20,090, 000)-(3,450)(33,700) 6(2,077, 500)-(3, 450) 120, 540, 000 –116, 265,000 12, 465, 000–11,902,500 4,275, 000 562, 500 = 7.60

fullscreen
Step 3

The value of slope (b...

help_outline

Image Transcriptionclose

ΣΧ ΣΥ 3,450 -(7.6): 33, 700 = 5, 616.67 –4,370 =1, 246.67

fullscreen

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Math

Statistics

Other

Related Statistics Q&A

Find answers to questions asked by student like you
Show more Q&A
add
question_answer

Q: Although older Americans are most afraid of crime, it is young people who are more likely to be the ...

A: Hello there! there are more than three subparts in the question. According to our policies we cannot...

question_answer

Q: the area between z=-1.48 and z=1.92 is

A: It is given that the z-scores are –1.48 and 1.92.

question_answer

Q: Assume that human body temperatures are normally distributed with a mean of 98.23 degrees Upper F an...

A: Step-by-step procedure to obtain the percentage using MINITAB:Choose Graph &gt; Probability Distribu...

question_answer

Q: 6 (E 15) What is the value of x when y' =3, if the equation of the regression line is )2 D) 3 y' = 2...

A: Given datay' = 3y' = 23.1 – 3.8xputting y' = 3 to get x3 = 23.1 – 3.8xx = (3 – 23.1)/(-3.8) = 5.289 ...

question_answer

Q: how would i solve this

A: The provided information are:

question_answer

Q: Identify the null hypothesis, alternative hypothesis, test statistic, P-value, conclusion about the ...

A: It is given that sample mean and standard deviation are 20 and 1.5, respectively.The test hypotheses...

question_answer

Q: For a confidence level of 98% with a sample size of 11, find the critical t value.

A: The degrees of freedom is,

question_answer

Q: 48) In an Analysis of Variance Summary Table, if the Mean Square Between 14 and the Mean Square With...

A: 48) From the given information, the between mean square is 14 and within mean squares 27.

question_answer

Q: Question 6

A:  6.The null and alternative hypotheses are stated below: