Schotte Manufacturing Company Uses Two Different Independent Variables (Machine-Hours and Number

Essay

Schotte Manufacturing Company uses two different independent variables (machine-hours and number of packages)in two different equations to evaluate costs of the packaging department.The most recent results of the two regressions are as follows:
Machine-hours:
$\begin{array}{lrrr}\text { Variable } & \text { Coeffcient }& \text { StandardError }& \text { t-Value }\\\text { Constant } & \$ 748.30 & \$ 341.20 & 2.19 \\\text { Independent Variable } & \$ 52.90 & \$ 35.20 & 1.50\end{array}$
$\mathrm{r}^{2}=0.33$

$\text { Number of packages: }$
$\begin{array}{lrrr}\text { Variable } & \text { Coeffcient }& \text { StandardError }& \text { t-Value }\\\text { Constant } & \$ 242.90 & \$ 75.04 & 3.24 \\\text { Independent Variable } & \$ 5.60 & \$ 2.00 & 2.80\end{array}$
$\mathrm{r}^{2}=0.73$ Required:
a.What are the estimating equations for each cost driver?
b.Which cost driver is best and why?