Cost Estimation. 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 ($) 4004000 4505000 5505400 6005900 7006400 7507000 Regression equation y=1246.667 + 7.6xVariable cost per unit produced = 7.6Compute the coefficient of determination. = 0.9587Question 1 - What percentage of the variation in total cost can be explained by production volume?Question 2 - The company’s production schedule shows 500 units must be produced next month. Predict the total cost for this operation.Please do not handwrite...thank you!

Procedure to conduct regression analysis using Excel: Enter the data of Production Volume and Total…

Answered: Cost Estimation. An important…

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Cost Estimation. 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

Regression equation y=1246.667 + 7.6x

Variable cost per unit produced = 7.6

Compute the coefficient of determination. = 0.9587

Question 1 - What percentage of the variation in total cost can be explained by production volume?
Question 2 - The company’s production schedule shows 500 units must be produced next month. Predict the total cost for this operation.

Please do not handwrite...thank you!

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