Form groups of two or more students to complete the following requirements:

REQUIRED

1. Given your findings in Problem 10-28, should Hanks use multiple regression analysis to better understand the cost drivers of overhead costs? Explain your answer.

2. Hanks decides that the simple regression analysis in Problem 10-28 should be extended to a multiple regression analysis. She finds the following result:

™¦ Regression 3. Overhead costs = a + (b, X number of academic programs) + (b2 X number of enrolled students)

The coefficient of correlation between number of academic programs and number of students is 0.60. Use the format in Exhibit 10-13 to evaluate the multiple regression model. Should Hanks choose the multiple regression model over the two simple regression models of Problem 10-28?
3. How might the president of Eastern University use these regression results to manage overhead costs?

Overhead Costs Number of (in thousands) Programs Enrolled Students ear S16,200 23,040 20,160 24,120 23,400 27,720 28,440 24,120 27,360 35,640 37,440 45,720 3,400 5,000 2,600 4,700 3,900 4,900 5,700 3,900 3,500 3,700 5,600 7,600 29 36 49 53 54 58 4 72 83 73 101 103 10 12 * Regression 1. Overhead costs a+(b X number of academic programs) Variable Coefficient S8,553.30 $288.76 Standard Error t-Value 2.14 5,08 Constant Independent variable I: number of $4,002.41 academic programs r 0.72; Durbin-Watson statistic 2.07 The adjusted r0.693 56.80 Regression 2. Overhead costs-(bX number of enrolled students) Variable Coefficient S7,190.10 S 4.53 Standard Error t-Value 1.18 3.52 Constant S6,081.45 Independent variable 1: number of 1.29 enrolled students r 0.55: Durbin-Watson statistic 0.82 The adjusted r0.509