Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 32

Analysis of Regression Results Wang Manufacturing uses regression analysis to predict manufacturing overhead costs based on labor-hours and/or machine-hours and has developed the three following regression equations.

	Regression 1	Regression 2	Regression 3
SE	33,844	45,383	31,044
R-squared	0.55	0.35	0.58
t-values:
Labor-hours	2.3		1.9
Machine-hours		1.1	0.8

Required Which regression would you choose and why?