Sydney Company Manufactures Chairs $x=$ Cutting Time $y=\$ 19500+\$ 20 x$

Essay

Sydney Company manufactures chairs.Because the efforts of manufacturing are approximately equal between labour and machinery,management is considering other possible cost drivers.By considering different cost drivers,it is anticipated that the estimating process can be improved.The following cost estimating equations with their r² values have been determined for 20X9:
Required:
1. $x=$ cutting time $y=\$ 19500+\$ 20 x$ $r^{2}=0.65$
2. $X=$ labour $\mathrm{y}=\$ 5000+\$ 25 \mathrm{X}$ $\mathrm{r}^{2}=0.49$
3. $x=$ machinery $y=\$ 44500+\$ 5 x$ $\mathrm{r}^{2}=0.55$
a.Which equation should be selected for the analysis?
b.What other factors should be included in the selection of the estimating equation?
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