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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 26
Method of Least Squares, Evaluation of Cost Equation
Lassiter Company used the method of least squares to develop a cost equation to predict the cost of moving materials. There were 80 data points for the regression, and the following computer output was generated:
The activity driver used was the number of moves.
Required:
1. What is the cost formula?
2. Using the cost formula, predict the cost of moving materials if 340 moves are made. Now prepare a 95 percent confidence interval for this prediction. (Round your answers to the nearest dollar.)
3. What percentage of the variability in moving cost is explained by the number of moves? Do you think the equation will predict well? Why or why not?
Lassiter Company used the method of least squares to develop a cost equation to predict the cost of moving materials. There were 80 data points for the regression, and the following computer output was generated:
The activity driver used was the number of moves.
Required:
1. What is the cost formula?
2. Using the cost formula, predict the cost of moving materials if 340 moves are made. Now prepare a 95 percent confidence interval for this prediction. (Round your answers to the nearest dollar.)
3. What percentage of the variability in moving cost is explained by the number of moves? Do you think the equation will predict well? Why or why not?
Explanation
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From the information about the Lassiter ...
Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen
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