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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

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