THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION

question 150

Essay

THE NEXT QUESTIONS ARE BASED ON THE FOLLOWING INFORMATION:
As director of the local tourist board,you are interested in determining the factors that influence the hotel occupancy rate in your city each month.Hotel occupancy can be measured as the percentage of available hotel rooms that are occupied by paying customers.You develop the following model: Y = β₀ + β₁X₁ + β₂X₂ + β₃X₃ + β₄X₄ + ε,where Y is the hotel occupancy rate,X₁ is the total number of passengers arriving at the airport,X₂ is a price index of local hotel room rates,X₃ is the consumer confidence index,and X₄ is a dummy variable = 1 during the months of June,July,and August.You look at data from the past 36 months and obtain the following results:
= 67.1 + 0.02x₁ - 0.055x₂ + 0.08x₃ + 12.3x₄,R² = 0.67,
= 58.3,
= 0.008,
= 0.01,
= 0.06,
= 4.7,and SSE = 576.
-What are your hypotheses regarding this model? Explain.Are there any other variables you would have liked to include?

---

Definitions:

Direct Labor Cost Variance

The difference between the budgeted cost for direct labor and the actual cost incurred, used as a measure of performance efficiency.

Flexible Budgets

Budgets that adjust or flex based on changes in the volume of activity, allowing for more effective financial control.

Fixed Budgets

A financial plan that does not change, regardless of any variations in business activity levels.

Variable Overhead Efficiency Variance

A measure used in managerial accounting to assess the efficiency of variable overhead resource utilization, comparing the actual costs incurred to what should have been incurred at a given level of production.