You Are Trying to Decide Whether to Use Machine Hours

question 65

Multiple Choice

You are trying to decide whether to use machine hours or direct labor hours as the best predictor for overhead costs.Below are the results from the two regression analyses that you run.

Which of the following statements is the most correct regarding which activity would be the best cost driver and why?

• A)Direct labor hours because the variable explains 76% of the variance in overhead costs.
• B)Machine hours because the variable explains 78% (100 - 22%)of the variance in overhead costs.
• C)Machine hours because only 22% of the variance in overhead costs is not explained in the analysis.
• D)Direct labor hours because this activity is perfectly correlated with overhead costs.
• E)None of the answer choices is correct.

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Definitions:

AFL

The American Federation of Labor, a national federation of labor unions in the United States, initially founded in 1886.

Predecessor

An entity or person that came before another in a specific role or position.

Jurisdictional Dispute

A dispute involving two or more unions over which should represent the workers in a particular shop or plant.

Labor Arbitrator

An individual or panel tasked with resolving disputes between employers and employees or unions through binding decision-making.