Arfaei Company Manufactures Chairs $X =$ Cutting Time $\quad y = \$ 19,500 + \$ 20 X \quad r ^ { 2 } = 0.65$

question 125

Essay

Arfaei Company manufactures chairs.Because the efforts of manufacturing are approximately equal between labor and machinery,management is considering other possible cost drivers.By considering different cost drivers,it is anticipated that the estimating process can be improved.The following cost estimating equations with their r² values have been determined for 20X5:
1. $X =$ cutting time $\quad y = \$ 19,500 + \$ 20 X \quad r ^ { 2 } = 0.65$
2. $X =$ labor $\quad\quad\quad \mathrm { y } = \$ 5,000 + \$ 25 X \quad \mathrm { r } ^ { 2 } = 0.49$
3. $X =$ machinery $\quad y = \$ 44,500 + \$ 5 X \quad r ^ { 2 } = 0.55$ Required:
a.Which equation should be selected for the analysis?
b.What other factors should be included in the selection of the estimating equation?

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Definitions:

Stratified

Describes a structure that is arranged in layers or levels, often used when talking about certain types of epithelial cells.

Gap Junctions

Channels that allow for direct communication between the cytoplasm of adjacent cells, facilitating the transfer of ions and small molecules.

Desmosomes

Cell structures specialized for cell-to-cell adhesion, providing mechanical strength to tissues by binding cells together via linker proteins.

Tight Junctions

Specialized connections between neighboring cells that prevent the leakage of substances across a tissue.