(Appendix 2A)Here Are the Results Using Regression Analysis on Maintenance

question 138

Essay

(Appendix 2A)Here are the results using regression analysis on maintenance and repair costs for the production machines in a manufacturing company. Two cost drivers were chosen: number of machine setups (X1)and machine hours (X2).
Variable Coefficient t-statistic p-value
intercept 70,324.15 2.81 p<0.01
X1 14.83 2.39 p <0.05
X2 2.07 2.24 p<0.05
Adjusted R-square = 0.87
a)Write an equation for total cost based upon the regression analysis.
b)What does the Adjusted R-square tell you about the quality of information that would be produced using this cost driver? Explain.
c)Is it economically plausible that the number of setups and machine hours could drive the costs of the maintenance and repair for the machines? Explain.

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Definitions:

Natural Killer Cells

A type of lymphocyte (white blood cell) that plays a major role in the rejection of tumors and cells infected by viruses.

Interferons

A group of signaling proteins made and released by host cells in response to the presence of pathogens, such as viruses, bacteria, or tumor cells.

Antigen-Presenting Cells

Cells that process and present antigens to T-cells to initiate an immune response.

Major Histocompatibility Complex

Major Histocompatibility Complex is a set of genes that code for proteins on the cell surface, which help the immune system recognize foreign substances.