The Feline Company Has Been Having Some Difficulties Estimating Its

question 109

Essay

The Feline Company has been having some difficulties estimating its manufacturing overhead costs. In the past, manufacturing overhead costs have been related to production levels. However, some production managers have indicated that the size of their production lots might also be having an impact on the amount of their monthly manufacturing overhead costs. In order to investigate this possibility, the company collected information on its monthly manufacturing overhead costs, production in units, and average production lot size for 2020.
$\begin{array}{lllll}&&& \text {Average }\\&&& \text {Monthly}\\& \text { Production } & \text { Manufacturing } & \text { Production } \\\text { Month } & \text { (Units) } & \text { Overhead Cost } & \text { Lot Size }\\1 & 75,000& \$ 25,800 &20 \\2 & 90,000 & 843,875 & 19 \\3 & 65,000 & 910,125 & 24 \\4 & 80,000& 946,000 & 19 \\5 & 55,000 & 879,000 & 24\\6 & 50,000 & 825,000 & 18 \\7 & 85,000& 960,000 & 22 \\8 & 105,000& 1,053,500 & 25 \\9 & 102,000& 1,020,000& 23 \\10 & 68,000& 905,000 & 20 \\11 & 75,000 & 938,000 & 22 \\12 & 95,000 & 995,000 & 24\end{array}$

Regression analysis results of the information presented above are as follows:
Ordinary regression:
$$\begin{array} { | l | l | } \hline \text { Equation: } & \$ 691.741 + \$ 3.0692 \times \text { units } \\\hline \text { r-square: } & 0.628 \\\hline\end{array}$$
Multiple regression:
$$\begin{array} { | l | l | l | } \hline \text { Equation: } & \$ 482,172 + \$ 2.4918 \times \text { units } + \$ 1.770 .939 \times \text { lot size } \\\hline \text { r-square: } & 0.777\\\hline \end{array}$$
Required:
(a.) Use the results from the ordinary regression and estimate next month's manufacturing overhead costs, assuming the company is planning to produce 92,000 units. (final answer should be rounded to the nearest whole dollar)
(b.) Use the results from the multiple regression and estimate the next month's manufacturing costs, assuming the company is planning to produce 92,000 units with an average lot size of 21. (final answer should be rounded to the nearest whole dollar)
(c.) Comment on which regression seems to be more appropriate under these circumstances. What additional information would you like to see? Be specific.

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Definitions:

Responsibilities

Duties or tasks that an individual is required or expected to carry out.

Integrative Outcomes

Integrative outcomes refer to solutions in negotiations or conflicts where all parties' needs are met through creative problem-solving, leading to mutual benefits and win-win scenarios.

Negotiator

An individual involved in discussions aimed at reaching an agreement or resolving a dispute between two or more parties.

Manage

The act of controlling or overseeing functions and tasks to achieve desired objectives.