Multiple Regression. Maastrict Controls, Ltd., is a regional producer of sophisticated precision control devices. To assess the potential payoff to adopting the recommendations of a Total Quality Management (TQM) seminar attended by managerial staff, the company has decided to analyze the sales effects of price and product quality for a range of leading products. The company recently compiled and used a regression analysis approach to study the following unit sales, price, and product quality information:
As a first step in the analysis, the company ran simple regressions of unit sales on each of the potentially important independent variables of price and the percent failure rate (product quality):
SALES = 220440 - 35980 PRICE
SALES = 178434 - 56659 PRICE + 115808 FAILURE
Definitions:
Work in Process Account
An account that tracks the costs associated with unfinished goods that are still in the production process.
Materials Purchased
Refers to the raw materials bought by a company for use in the production process.
Weighted-Average Method
An inventory costing method that calculates the cost of goods sold and ending inventory based on the average cost of all units available for sale during the period.
Equivalent Unit
A concept in cost accounting used to allocate costs to partially completed units of production, treating them as an equivalent amount of fully completed units.
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