Refer to the information in P3.4. The following regression results were obtained using these data:

Required:

A. What is the estimated amount of overhead if 2,200 direct labor hours are worked next month?B. What is the estimated amount of overhead if 4,200 machine hours are worked next month?C. Which of these variables, direct labor hours or machine hours, do you think is more useful? Why?

Data from in P3.4

Wickstrom currently uses labor hours to predict overhead. However, the accountant at Wickstrom has suggested that machine hours would be a better predictor of overhead cost than labor hours. The following data have been provided to you from the past year:

Transcribed Image Text:

Regression Multiple R R square Direct Labor Hours Statistics Coefficients 0.83539 Intercept 0.69788 Labor hours Machine Hours Regression Statistics Multiple R 0.99468 Intercept R square 14970.9199 25.8391 Coefficients 0.98939 Machine hours 35542.9589 8.9592