Accountants in cost analysis to shed light

Assignment Help Basic Statistics
Reference no: EM131111230

Multiple regression is used by accountants in cost analysis to shed light on the factors that cause costs to be incurred and the magnitudes of their effects. The independent variables of such a regression model are the factors believed to be related to cost, the dependent variable. In some instances, however, it is desirable to use physical units instead of cost as the dependent variable in a cost analysis. This would be the case if most of the cost associated with the activity of interest is a function of some physical unit, such as hours of labor. The advantage of this approach is that the regression model will provide estimates of the number of labor hours required under different circumstances and these hours can then be costed at the current labor rate (Horngren, Foster. and Datar, 1994). The sample data shown in the table below have been collected from a firm's accounting and production records to provide cost information about the firm's shipping department. The EXCEL computer printout for fitting the model  is provided on page 592.

a. Find the least squares prediction equation.

b. Use an F-test to investigate the usefulness of the model specified in part a. Use a = .01, and state your conclusion in the context of the problem

c. Test H0:  ß2 = 0 versus Ha: ß2 ≠ 0 using α = .05. What do the results of your test suggest about the magnitude of the effects of x2 on labor costs?

d. Find R2, and interpret its value in the context of the problem.

e. If shipping department employees are paid $7.50 per hour, how much less, on average, will it cost the company per week if the average number of pounds per shipment increases from a level of 20 to 21 7 Assume that x1 and x2 remain unchanged. Your answer is an estimate of what is known in economics as the expected marginal cost associated with a one pound increase in x3.

f. With what approximate precision can this model be used to predict the hours of labor'? [Note: The precision of multiple regression predictions is discussed in Section 10.6.1]

g. Can regression analysis alone indicate what factors cause costs to increase? Explain.

Reference no: EM131111230

Questions Cloud

Study of street vendors in the city of puebla : Refer to the World Development (Feb. 1998) study of street vendors' earnings, y, Exercises 10.7 and 10.20 (pp. 573,586).The STATISTIX printout below shows both a 95% prediction interval for y (left side) and a 95% confidence interval for E(y) ..
How is the future value of a mixed stream of cash flows : How is the future value of a mixed stream of cash flows calculated? How is the present value of a mixed stream of cash flows calculated?
Difference between a pretest loop and a posttest loop : Describe the difference between a pretest loop and a posttest loop.
Calculate the elasticity of demand for joy beer : 1. Should PJ be increased or decreased to maximize revenue? How do you know? 2. Calculate the elasticity of demand for Joy's beer with respect to PC, T, and AC. 3. Calculate the price range over which the demand for Joy's beer is price elastic.
Accountants in cost analysis to shed light : Multiple regression is used by accountants in cost analysis to shed light on the factors that cause costs to be incurred and the magnitudes of their effects. The independent variables of such a regression model are the factors believed to be relat..
Why is the present value of a perpetuity : What is a perpetuity? Why is the present value of a perpetuity equal to the annual cash payment divided by the interest rate?
Refer to the journal of applied ecology study : Refer to the Journal of Applied Ecology study of the feeding habits of baby snow geese, Exercise 10.11 (p. 577).The MINITAB printout for the model relating weight change (y) to digestion efficiency (x1) and acid detergent fiber (x2) is reproduced ..
Ppf and gain from trade : Which theory explains that if countries specialize in the production of the good/service in which they have a comparative advantage, then all countries can move outside their PPF and gain from trade.
Illinois managers using a regression analysis : Much research-and much litigation-has been conducted on the disparity between the salary levels of men and women. Research reported in Work and Occupations (Nov. 1992) analyzes the salaries for a sample of 191 Illinois managers using a regression ..

Reviews

Write a Review

 

Basic Statistics Questions & Answers

  De acuerdo con la agencia seguros de un estado

De acuerdo con la Agencia Seguros de un Estado, una familia de 4 miembros gasta entre 400 y 3800 dólares anuales en toda clase de seguros. Sunponga que el dinero que se gasta tiene una distribución uniforme.

  Estimate the true proportion of incomplete files

Estimate the true proportion of the incomplete files for All the bank's commericial loans. Write a statement about the confidence level and the interval you find.

  Let f denote the probability that the second vehicle

a certain university has 14 vehicles available for use by faculty and staff. four of these are vans and 10 are cars. on

  A random sample of nine observations are drawn from the

suppose we are testing the null hypothesis ho20 and the alternative ha does not 20 for a normal population with a

  Suppose you conduct an experiment in which you flip a

suppose you conduct an experiment in which you flip a two-sided coin six times in succession. how many elements are

  Graphical display relationship between variable-scatter plot

Below are revenue and profit (both in $ billions) for nine large entertainment companies.

  Sample proportion of large gloves

The sample proportion of large gloves for each location is            and           . (Round your answers to 4 decimal places.)

  Assume each repetition is independent of the others what is

q1. consider an experiment that results in a positive outcome with probability 0.38 and a negative outcome with

  A sample of 800 voters revealed that 52 of them would vote

a sample of 800 voters revealed that 52 of them would vote for a specific issue. create and interpret a 95 confidence

  Perceive degree of participation of african-american

A study was undertaken to assess how both majority and minority groups perceive the degree of participation of African-American models in television commer- cials.

  Establishment of subsidiaries in foreign markets

If perfect markets existed, would wages, prices, and interest rates among countries be more similar or less similar than under conditions of imperfect markets? Why?

  Section of the statistical abstract of the united states

At least half the patients are under 15 years old? First, describe how this can be modelled as a binomial distribution with 8 trials, where success is visitor age is under 15 years old and the probability of success is 20 percent.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd