You Are Trying to Determine Whether Machine Hours or Direct

question 19

Essay

You are trying to determine whether machine hours or direct labour dollars would be the best cost driver for overhead costs.You run two regression analyses and obtain the following results:
Machine hours
$\begin{array}{ll}\text { Multiple R } & .39429 \\\text { R square } & .15547 \\\text { Adjusted R square } & .14964 \\\text { Standard error } & .44416\end{array}$
Direct labour dollars:
$\begin{array}{ll}\text { Multiple R } &.89429\\\text { R square } &.79547 \\\text { Adjusted R square } & .289647 \\\text { Standard }&.44416\end{array}$
Which variable would be the best selection for a cost driver and why?

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