Homework Help is Here – Start Your Trial Now!
Math
Statistics
Managers in the Stamping Department have been studying overhead cost and the relationship with machine hours. Data from the most recent 12 months follow. Overhead (RM) Machine Hours 5,030 1,600 7,210 4,560 6,880 6,520 6,230 5,570 7,728 5,810 4,580 6,010 Month January February March 2,730 600 3,403 2,200 3,411 2,586 3,364 2,411 3,960 2,897 2,207 2,864 April May June July August September October November December The manager of the department has requested a regression analysis of these two variables (labeled no. 1 below). However, the staff person performing the analysis decided to run another regression that excluded February (labeled no. 2). She observed that the volume of activity was very low for that month because of two factors: a severe flu outbreak and an electrical fire that disrupted operations for about 10 working days. Regression No. 1 Regression No. 2 Constant 428.00 Constant 550.00 R? 0.79 R? 0.74 b coefficient 1.86 b coefficient 1.90 Required: i. Prepare an overhead cost breakdown by using the high-low method. The analysis should be useful in helping to predict variable and fixed costs under normal operating conditions. ii. Prepare an estimate of overhead cost for a volume of 3,000 machine hours by using regression no. 1. You now have the ability to analyze three cost estimates from the high-low data in part (i) and the two regression equations. (a) Which one do you feel would provide the best estimate? (b) Explain the factors that support your choice. iii.

Managers in the Stamping Department have been studying overhead cost and the relationship with machine hours. Data from the most recent 12 months follow. Overhead (RM) Machine Hours 5,030 1,600 7,210 4,560 6,880 6,520 6,230 5,570 7,728 5,810 4,580 6,010 Month January February March 2,730 600 3,403 2,200 3,411 2,586 3,364 2,411 3,960 2,897 2,207 2,864 April May June July August September October November December The manager of the department has requested a regression analysis of these two variables (labeled no. 1 below). However, the staff person performing the analysis decided to run another regression that excluded February (labeled no. 2). She observed that the volume of activity was very low for that month because of two factors: a severe flu outbreak and an electrical fire that disrupted operations for about 10 working days. Regression No. 1 Regression No. 2 Constant 428.00 Constant 550.00 R? 0.79 R? 0.74 b coefficient 1.86 b coefficient 1.90 Required: i. Prepare an overhead cost breakdown by using the high-low method. The analysis should be useful in helping to predict variable and fixed costs under normal operating conditions. ii. Prepare an estimate of overhead cost for a volume of 3,000 machine hours by using regression no. 1. You now have the ability to analyze three cost estimates from the high-low data in part (i) and the two regression equations. (a) Which one do you feel would provide the best estimate? (b) Explain the factors that support your choice. iii.

Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
18th Edition
ISBN:9780079039897
Author:Carter
Publisher:Carter
Chapter10: Statistics
Section10.6: Summarizing Categorical Data
Problem 23PPS
See similar textbooks
icon
Related questions
Question
Managers in the Stamping Department have been studying overhead cost and the relationship with machine hours. Data from the most recent 12 months follow. Overhead (RM) Machine Hours 5,030 1,600 7,210 4,560 6,880 6,520 6,230 5,570 7,728 5,810 4,580 6,010 Month January February March 2,730 600 3,403 2,200 3,411 2,586 3,364 2,411 3,960 2,897 2,207 2,864 April Мay June July August September October November December The manager of the department has requested a regression analysis of these two variables (labeled no. 1 below). However, the staff person performing the analysis decided to run another regression that excluded February (labeled no. 2). She observed that the volume of activity was very low for that month because of two factors: a severe flu outbreak and an electrical fire that disrupted operations for about 10 working days. Regression No. 1 Constant Regression No. 2 428.00 Constant 550.00 R? 0.79 0.74 b coefficient 1.90 R? b coefficient 1.86 Required: i. Prepare an overhead cost breakdown by using the high-low method. The analysis should be useful in helping to predict variable and fixed costs under normal operating conditions. ii. Prepare an estimate of overhead cost for a volume of 3,000 machine hours by using regression no. 1. iii. You now have the ability to analyze three cost estimates from the high-low data in part (i) and the two regression equations. (a) Which one do you feel would provide the best estimate? (b) Explain the factors that support your choice.
Transcribed Image Text:Managers in the Stamping Department have been studying overhead cost and the relationship with machine hours. Data from the most recent 12 months follow. Overhead (RM) Machine Hours 5,030 1,600 7,210 4,560 6,880 6,520 6,230 5,570 7,728 5,810 4,580 6,010 Month January February March 2,730 600 3,403 2,200 3,411 2,586 3,364 2,411 3,960 2,897 2,207 2,864 April Мay June July August September October November December The manager of the department has requested a regression analysis of these two variables (labeled no. 1 below). However, the staff person performing the analysis decided to run another regression that excluded February (labeled no. 2). She observed that the volume of activity was very low for that month because of two factors: a severe flu outbreak and an electrical fire that disrupted operations for about 10 working days. Regression No. 1 Constant Regression No. 2 428.00 Constant 550.00 R? 0.79 0.74 b coefficient 1.90 R? b coefficient 1.86 Required: i. Prepare an overhead cost breakdown by using the high-low method. The analysis should be useful in helping to predict variable and fixed costs under normal operating conditions. ii. Prepare an estimate of overhead cost for a volume of 3,000 machine hours by using regression no. 1. iii. You now have the ability to analyze three cost estimates from the high-low data in part (i) and the two regression equations. (a) Which one do you feel would provide the best estimate? (b) Explain the factors that support your choice.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 5 steps with 5 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Recommended textbooks for you
Glencoe Algebra 1, Student Edition, 9780079039897…
Glencoe Algebra 1, Student Edition, 9780079039897…
Algebra
ISBN:
9780079039897
Author:
Carter
Publisher:
McGraw Hill
College Algebra (MindTap Course List)
College Algebra (MindTap Course List)
Algebra
ISBN:
9781305652231
Author:
R. David Gustafson, Jeff Hughes
Publisher:
Cengage Learning
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