Essay
A Manufacturing Company uses two different independent variables in two different equations to evaluate the cost activities of the packaging department, machine-hours and number of packages.The most recent month's results of the two regressions are as follows:
Machine hours:
r2 = 0.29
Number of packages:
r2 = 0.61
There were twenty degrees of freedom.The critical value at the 95% level is 1.729.Required:
a.What are the estimating equations for each cost driver?
b.Which cost driver is best and why?
Correct Answer:
Verified
a.machine-hours y = $652.32 + $44.30x
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