# 204 Regression Case

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204 Regression Case

204

Encino Com 2011 Case

1.

The company should use the departmental overhead rates to assign the overhead. Under plant-wide overhead rates method, in machine department the overhead cost is declining while the direct labor cost is increasing; but in assembly department, the overhead cost goes up with the increasing of the direct labor cost. It is obviously problematic.

I list the regression as follows:

Machine Hour Regression-Assembly Department

 SUMMARY OUTPUT Regression Statistics Multiple R 0.538998725 R Square 0.290519625 Adjusted R Square 0.219571588 Standard Error 343.0600974 Observations 12 ANOVA df SS MS F Significance F Regression 1 481920.612 481920.61 4.09482257 0.070558815 Residual 10 1176902.3 117690.23 Total 11 1658822.92 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Intercept 7029.421739 754.053925 9.3221738 3.0129E-06 5349.284892 8709.558586 X Variable 1 10.02869565 4.9559499 2.0235668 0.07055881 -1.01384886 21.07124017

Direct Labor Cost Regression-Assembly Department

 SUMMARY OUTPUT Regression Statistics Multiple R 0.9739146 R Square 0.9485096 Adjusted R Square 0.9433606 Standard Error 92.419407 Observations 12 ANOVA df SS MS F Significance F Regression 1 1573409.4 1573409.4 184.21093 9.1047E-08 Residual 10 85413.468 8541.3468 Total 11 1658822.9 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Intercept 4100.8809 328.30809 12.490953 2.002E-07 3369.36483 4832.3969 X Variable 1 0.2592961 0.0191046 13.572433 9.105E-08 0.21672839 0.3018639