Author Question: Sisler Company would like to estimate its total manufacturing costs using regression analysis ... (Read 77 times)

FButt · **on:** Jan 5, 2020

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?

ally · **Reply #1 on:** Jan 5, 2020

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