Question

An important appleason ce regresson analysis an accounting is n th¢ estimation of cost by Colectrg data an volume and cost and using the least squares method to develep an estimated regression equ ation relating volume and cost, an 8ccountant can estmete the cost associated with a perticular manutacturing velume, Consider the folowing smple of prodution volumes and total cest data for a manufecturing opersion Production Volume (units) Total Cost ($) 5,900 6,300 6.800 7.300 a. Compute bs and bo (to 1 decimal) 11.0 o 165.5 3 Complece the esimated regressien equanien (to 1 0ecima 9-165.5 311.03 b. What is the vanable cost per unt produced (to 1 decimal) c. compute the coemoent of determination (to 3 decimals) Note: resort2 etween o and 1 What percentage of the ขอเ¡ation in total cost can be e-plained by theproduction volume (to t deomap d. The company's producton schedule shows soo urts must be produced next month. What the estimated total cost for ths operation Cto the nearest ฒhole number)?

Answer 1

)a) ( please check data on Y column as picture is not clear and revert if any value is different)

from above:

b1 =7.6

bo=2146.7  

b)variable cost =7.6

c)

r² =0.959

percent of variation that can be explained =95.9%

d)

estimated total cost =2146.7+7.6*500=5947