Following are the results from two different simple regression analyses, estimating the costs of the purchasing department using number of purchase orders and number of vendors as potential cost drivers.

a)Which independent variable explains more of the variation in purchasing costs? Explain your choice.
b)Choose the most appropriate cost driver and write the cost function.
c)For an upcoming month, the number of vendors is estimated to be 150, while the number of purchase orders is estimated to be 340. Using the most appropriate cost driver, estimate the total cost for that month.
d)List several uncertainties that could affect the accuracy of the cost function in estimating the cost for the upcoming month.

Question

Following are the results from two different simple regression analyses, estimating the costs of the purchasing department using number of purchase orders and number of vendors as potential cost drivers.
   
a)Which independent variable explains more of the variation in purchasing costs? Explain your choice.
b)Choose the most appropriate cost driver and write the cost function.
c)For an upcoming month, the number of vendors is estimated to be 150, while the number of purchase orders is estimated to be 340. Using the most appropriate cost driver, estimate the total cost for that month.
d)List several uncertainties that could affect the accuracy of the cost function in estimating the cost for the upcoming month.

Quizplus · Accepted Answer

The Answer of Following are the results from two different simple regression analyses, estimating the costs of the purchasing department using number of purchase orders and number of vendors as potential cost drivers.
   
a)Which independent variable explains more of the variation in purchasing costs? Explain your choice.
b)Choose the most appropriate cost driver and write the cost function.
c)For an upcoming month, the number of vendors is estimated to be 150, while the number of purchase orders is estimated to be 340. Using the most appropriate cost driver, estimate the total cost for that month.
d)List several uncertainties that could affect the accuracy of the cost function in estimating the cost for the upcoming month.

Following Are the Results from Two Different Simple Regression Analyses