Morris Inc. is trying to predict costs for its production department. It has collected data for...

Transcribed Image Text:

Morris Inc. is trying to predict costs for its production department. It has collected data for the past 60 periods on total costs in the production department as well as number of production runs and number of direct labor hours. Management estimated two different regressions to predict production costs with the following output: Variable Constant Coefficient Std. Error t-value p-value Variable Coefficient Std. Error t-value p-value 560.35 303.14 1.8485 0.0943 Constant 991.45 160.62 6.1726 0.0001 # of Runs 0.2384 0.0855 2.7879 0.0192 DL Hours 0.0778 0.0351 2.2171 0.0509 SE for the model: 369.53 R-squared: 0.4373 SE for the model: 260.38 R-squared: 0.3296 Management expects there will be 100,000 production runs and 275,000 direct labor hours next period. Using the best predictor of costs, how much should management expect in variable production costs next period? Morris Inc. is trying to predict costs for its production department. It has collected data for the past 60 periods on total costs in the production department as well as number of production runs and number of direct labor hours. Management estimated two different regressions to predict production costs with the following output: Variable Constant Coefficient Std. Error t-value p-value Variable Coefficient Std. Error t-value p-value 560.35 303.14 1.8485 0.0943 Constant 991.45 160.62 6.1726 0.0001 # of Runs 0.2384 0.0855 2.7879 0.0192 DL Hours 0.0778 0.0351 2.2171 0.0509 SE for the model: 369.53 R-squared: 0.4373 SE for the model: 260.38 R-squared: 0.3296 Management expects there will be 100,000 production runs and 275,000 direct labor hours next period. Using the best predictor of costs, how much should management expect in variable production costs next period?

Answer rating: 100% (QA)

Answer To predict the variable production costs for the next period we can use the regression e... View the full answer