SCENARIO 16-14 a Contractor Developed a Multiplicative Time-Series Model to Forecast the Forecast

question 20

Multiple Choice

SCENARIO 16-14
A contractor developed a multiplicative time-series model to forecast the number of contracts in future quarters,using quarterly data on number of contracts during the 3-year period from 2011 to 2013.The following is the resulting regression equation:
ln Y^ˆ = 3.37 + 0.117 X - 0.083 Q₁ + 1.28 Q₂ + 0.617 Q₃
where
Y^ˆ is the estimated number of contracts in a quarter.
X is the coded quarterly value with X = 0 in the first quarter of 2011.
Q₁ is a dummy variable equal to 1 in the first quarter of a year and 0 otherwise.
Q₂ is a dummy variable equal to 1 in the second quarter of a year and 0 otherwise.
Q₃ is a dummy variable equal to 1 in the third quarter of a year and 0 otherwise.
-Referring to Scenario 16-14,in testing the coefficient of X in the regression equation (0.117) the results were a t-statistic of 9.08 and an associated p-value of 0.0000.Which of the following is the best interpretation of this result?

• A)The quarterly growth rate in the number of contracts is significantly different from 0% ( α = 0.05).
• B)The quarterly growth rate in the number of contracts is not significantly different from 0% ( α = 0.05).
• C)The quarterly growth rate in the number of contracts is significantly different from 100% ( α = 0.05).
• D)The quarterly growth rate in the number of contracts is not significantly different from 100% ( α = 0.05).

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Definitions:

Direct Labor Hours

The collective amount of time spent by employees actively engaged in the production process.

Unit Product Cost

The total cost associated with creating one unit of product, including direct labor, direct materials, and allocated overhead.

Raw Materials Cost

The total expense incurred for materials that are used in the manufacturing process to produce goods.

Direct Labor Wage Rate

The amount of money paid to workers for each hour of labor.