A Manufacturing Company Uses Two Different Independent Variables in Two

question 139

Essay

A Manufacturing Company uses two different independent variables in two different equations to evaluate the cost activities of the packaging department, machine-hours and number of packages.The most recent month's results of the two regressions are as follows:
Machine hours:
r² = 0.29
Number of packages:
r² = 0.61
There were twenty degrees of freedom.The critical value at the 95% level is 1.729.Required:
a.What are the estimating equations for each cost driver?
b.Which cost driver is best and why?

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Definitions:

Market Equilibrium

A situation in a market where the quantity of a product demanded by consumers equals the quantity supplied by producers, leading to a stable price.

Competitive Industry

An industry characterized by a large number of firms competing with each other to provide goods or services to consumers.

Market Demand

The total quantity of a product or service that consumers are willing and able to purchase at various prices during a specified time period.

Market Equilibrium

A state in a market where the quantity demanded by consumers equals the quantity supplied by producers, leading to a stable price.