Homework Help is Here – Start Your Trial Now!
Math
Statistics
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 3,700 450 4,700 550 5,100 600 5,600 700 6,100 750 6,700

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 3,700 450 4,700 550 5,100 600 5,600 700 6,100 750 6,700

Elementary Linear Algebra (MindTap Course List)
Elementary Linear Algebra (MindTap Course List)
8th Edition
ISBN:9781305658004
Author:Ron Larson
Publisher:Ron Larson
Chapter2: Matrices
Section2.CR: Review Exercises
Problem 89CR: Cellular Phone Subscribers The table shows the numbers of cellular phone subscribers y in millions...
See similar textbooks
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) Total Cost ($)
400 3,700
450 4,700
550 5,100
600 5,600
700 6,100
750 6,700
An important application of regression analysis in accounting is in the estimation of cost. By collecting data on volume and cost and using the least squares method to develop an estimated regression equation relating volume and cost, an accountant can estimate the cost associated with a particular manufacturing volume. Consider the following sample of production volumes and total cost data for a manufacturing operation. Production volume (units) Total Cost ($) TI 400 3,700 450 4,700 550 5,100 600 5,600 700 6,100 750 6,700 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. Compute b1 and bo (to 1 decimal). Do not round intermediate calculations. bo Complete the estimated regression equation (to 1 decimal). Do not round intermediate calculations. 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 r2 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.
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) Total Cost ($) TI 400 3,700 450 4,700 550 5,100 600 5,600 700 6,100 750 6,700 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. Compute b1 and bo (to 1 decimal). Do not round intermediate calculations. bo Complete the estimated regression equation (to 1 decimal). Do not round intermediate calculations. 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 r2 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.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 1 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Recommended textbooks for you
Elementary Linear Algebra (MindTap Course List)
Elementary Linear Algebra (MindTap Course List)
Algebra
ISBN:
9781305658004
Author:
Ron Larson
Publisher:
Cengage Learning
Linear Algebra: A Modern Introduction
Linear Algebra: A Modern Introduction
Algebra
ISBN:
9781285463247
Author:
David Poole
Publisher:
Cengage Learning
College Algebra
College Algebra
Algebra
ISBN:
9781337282291
Author:
Ron Larson
Publisher:
Cengage Learning
Algebra & Trigonometry with Analytic Geometry
Algebra & Trigonometry with Analytic Geometry
Algebra
ISBN:
9781133382119
Author:
Swokowski
Publisher:
Cengage
Glencoe Algebra 1, Student Edition, 9780079039897…
Glencoe Algebra 1, Student Edition, 9780079039897…
Algebra
ISBN:
9780079039897
Author:
Carter
Publisher:
McGraw Hill
Big Ideas Math A Bridge To Success Algebra 1: Stu…
Big Ideas Math A Bridge To Success Algebra 1: Stu…
Algebra
ISBN:
9781680331141
Author:
HOUGHTON MIFFLIN HARCOURT
Publisher:
Houghton Mifflin Harcourt
SEE MORE TEXTBOOKS