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Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen
Edition 2ISBN: 978-1111824402Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen
Edition 2ISBN: 978-1111824402 Exercise 55
Constructing a Confidence Interval Using Regression Results
Dohini Manufacturing Company, using 12 months of data on purchasing cost and number of purchase orders, ran a regression equation that yielded the following information on the intercept, X variable 1, and standard error. (All regression results have been rounded to the nearest cent.)
Dohini Manufacturing Company estimates that 430 purchase orders will be processed next month and wants to know the interval into which the actual value will fall with a 95 percent confidence level. (A table of selected values of the t Distribution is found in Exhibit 3.14.)
Required:
1. Determine the appropriate t-statistic value from Exhibit 3.14 for constructing Dohini Manufacturing Company's confidence interval.
2. Dohini Manufacturing Company estimates that next month will have 430 purchase orders. Construct a 95 percent confidence interval around the predicted value for materials handling cost. (Round the confidence interval answers to the nearest dollar.)
3. What if Dohini Manufacturing wanted a 90 percent confidence level? Will the confidence interval be larger or smaller than the one calculated in Requirement 2? Construct a 90 percent confidence interval. (Round the confidence interval answers to the nearest dollar.)
Dohini Manufacturing Company, using 12 months of data on purchasing cost and number of purchase orders, ran a regression equation that yielded the following information on the intercept, X variable 1, and standard error. (All regression results have been rounded to the nearest cent.)
Dohini Manufacturing Company estimates that 430 purchase orders will be processed next month and wants to know the interval into which the actual value will fall with a 95 percent confidence level. (A table of selected values of the t Distribution is found in Exhibit 3.14.)
Required:
1. Determine the appropriate t-statistic value from Exhibit 3.14 for constructing Dohini Manufacturing Company's confidence interval.
2. Dohini Manufacturing Company estimates that next month will have 430 purchase orders. Construct a 95 percent confidence interval around the predicted value for materials handling cost. (Round the confidence interval answers to the nearest dollar.)
3. What if Dohini Manufacturing wanted a 90 percent confidence level? Will the confidence interval be larger or smaller than the one calculated in Requirement 2? Construct a 90 percent confidence interval. (Round the confidence interval answers to the nearest dollar.)
Explanation
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Verified
1.Using 12 months of data on purchasing ...
Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen
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