Here Is the Output from Two Regression Models for Overhead

question 68

Essay

Here is the output from two regression models for overhead costs at a university using number of academic programs and number of students as potential cost drivers.
Number of academic programs
Adjusted R-square = 0.72
Intercept = 7,127.75 t-statistic = 2.14 p-value = .05
X1 variable = 240.64 t-statistic = 5.08 p-value = .001
Number of students
Adjusted R-square = 0.55
Intercept = 5,991.75 t-statistic = 1.18 p-value = .35
X1 variable = 3.78 t-statistic = 3.53 p-value = 0.01
a)Develop a cost function for each potential cost driver.
b)Compare the output for the two drivers. Choose the best cost driver for overhead costs and explain how you made that choice.
c)Suppose you use the best cost function from part (b)to estimate overhead cost for the next semester. Why is it highly unlikely that the actual cost will be exactly the same as the cost you estimated?

---

Definitions:

Distribution Intensity

describes the level of market coverage a brand chooses for distributing its products, ranging from intensive distribution in many outlets to exclusive distribution in select places.

Organic Lotions

Skincare products made from organically sourced ingredients, free from synthetic chemicals, and often certified to meet organic standards for purity and sustainability.

Wealthy Residents

Individuals or households that possess a significant amount of financial resources, often measured by high income or substantial assets.

Convenience Store

A retail outlet that sells a limited range of household goods and groceries, often open long hours for the convenience of customers.