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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 dat for a manufacturing operation. Production Volume (units) Total Cost ($) 400 4000 450 5000 550 5400 600 5900 700 6400 750 7000 a. Compute b 1 and bo (to 2 decimals if necessary). b1 bo Complete the estimated regression equation (to 2 decimals if necessary). y - b. What is the variable cost per unit produced (to 1 decimal)? c. Compute the coefficient of determination (to 4 decimals). Note: report r2 between o 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)?

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 dat for a manufacturing operation. Production Volume (units) Total Cost ($) 400 4000 450 5000 550 5400 600 5900 700 6400 750 7000 a. Compute b 1 and bo (to 2 decimals if necessary). b1 bo Complete the estimated regression equation (to 2 decimals if necessary). y - b. What is the variable cost per unit produced (to 1 decimal)? c. Compute the coefficient of determination (to 4 decimals). Note: report r2 between o 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)?

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...
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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 (units) Total Cost ($) 400 4000 450 5000 550 5400 600 5900 700 6400 750 7000 a. Compute b 1 and bo (to 2 decimals if necessary). b1 bo Complete the estimated regression equation (to 2 decimals if necessary). y = + b. What is the variable cost per unit produced (to 1 decimal)? c. Compute the coefficient of determination (to 4 decimals). Note: report r2 between 0 and 1. r2 = What percentage of the variation in total cost can be explained by the production volume (to 2 decimals)? d. The company's production schedule shows 500 units must be produced next month. What is the estimated total cost for this operation (to 2 decimals)?
Transcribed Image Text:An important application of regression analysis in accounting is in the estimation of cost. By collecting data on volume and cost and using the least squares method to develop an estimated regression equation relating volume and cost, an accountant can estimate the cost associated with a particular manufacturing volume. Consider the following sample of production volumes and total cost data for a manufacturing operation. Production Volume (units) Total Cost ($) 400 4000 450 5000 550 5400 600 5900 700 6400 750 7000 a. Compute b 1 and bo (to 2 decimals if necessary). b1 bo Complete the estimated regression equation (to 2 decimals if necessary). y = + b. What is the variable cost per unit produced (to 1 decimal)? c. Compute the coefficient of determination (to 4 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 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)?
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