A Regression Was Performed on a Sample of 16 Observations

question 31

Essay

A regression was performed on a sample of 16 observations. The estimated equation is = 23.5 - 14.28x₁ + 6.72x₂ + 15.68x₃. The standard errors for the coefficients are S_b1 = 4.2, S_b2 = 5.6, and S_b3 = 2.8. For this model, SST = 3809.6 and SSR = 3285.4.
a.Compute the appropriate t ratios.
b.Test for the significance of ₁, ₂, and ₃ at the 5% level of significance.
c.Do you think that any of the variables should be dropped from the model? Explain.
d.Compute R² and R_a². Interpret R².
e.Test the significance of the relationship among the variables at the 5% level of significance.

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Definitions:

Overapplied Manufacturing Overhead

Refers to a situation where the estimated manufacturing overhead cost is more than the actual manufacturing overhead incurred during a period.

Debit

An accounting entry that increases an asset or expense or decreases a liability, equity, or revenue.

Credit

A financial term defining the ability to obtain goods or services before payment, based on the trust that payment will be made in the future.

Underapplied Overhead

A situation where the applied manufacturing overhead is less than the actual manufacturing overhead costs incurred.