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

Exercise 38

Analysis of Regression Results; Appendix (Continuation of 8-36) The following table shows additional regression results presented by the researchers in the study described in Exercise 8-36. There are two regressions. The right-hand column shows the results for all patients, including those treated with laparoscopic surgery. The left-hand column shows the results for the sample of patients who were treated without the laparoscopic surgery, and the related costs.

	Not Laparoscopic	All Patients
Coefficients for independent variables
Regression intercept	$ 8,043	$ 3,719
Length of stay
Coefficient*	Not significant	861
Standard error for the coefficient	Not applicable	80
Number of complications
Coefficient	3,393	1,986
Standard error for the coefficient	1,239	406
Laparascopic
Coefficient	Not applicable	908
Standard error for the coefficient	Not applicable	358
ff-squared	0.11	0.53

* Note: All independent variables are significant at the level of p = .05 (and t-value >2) except for the length of stay variable in the nonlaparo scopic condition.

Required

1. Which of the two regressions has the better reliability and precision in estimating cost? Why?

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2. Interpret the values of each coefficient and the standard error for each coefficient.

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3. What are the t-values for each of the independent variables for each regression?

Step 1 of 4

Cost estimation

Cost estimation results in estimating variable and fixed costs for business. Cost estimation is made in case of expansions or new product line set-up by companies. Cost estimation helps to determine the cost for product.