Sisler Company would like to estimate its total manufacturing costs using regression analysis but
unsure whether machine hours or units produced would be a better predictor of total manufacturing
costs.
Output from regression analysis using machine hours as the volume (cost driver) follows.
(Note: the results are excerpts so not all of the regression analysis results are presented.)
Output from a regression analysis using units produced as the volume (cost driver) follows.
(Again, the results are excerpts so not all of the regression analysis results are presented.)
Required:
| 1. | What is the cost equation if machine hours is used as the volume (cost driver)? |
| 2. | Predict total manufacturing costs using machine hours as the volume (cost driver) if Sisler |
Company uses 18,000 hours.
| 3. | What is the cost equation if units produced is used as the volume (cost driver)? |
| 4. | Predict total manufacturing costs using units produced as the volume (cost driver) if Sisler |
Company produces 65,000 units.
| 5. | Which volume (cost driver) is a better predictor of total manufacturing costs? Why? |
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