Refer to Renkas Industries in P6-72A.
Requirements
1. Use Excel regression analysis to determine Renkas Industries' manufacturing overhead cost equation using DL hours as the cost driver. Comment on the R-square. Estimate manufacturing overhead costs if Renkas Industries incurs 25,500 DL hours in January.
2. Use Excel regression analysis to determine Renkas manufacturing overhead cost equation using number of units produced as the cost driver. Use all of the data provided. Project total manufacturing overhead costs if Renkas Industries produces 4,900 units. Which cost equation is better-this one or the one from Requirement 1? Why?
3. Use Excel regression analysis to determine Renkas Industries' manufacturing overhead cost equation using number of units produced as the cost driver. This time, remove any potential outliers before performing the regression. How does this affect the R-square? Project total manufacturing overhead costs if 4,900 units are produced.
4. In which cost equation do you have the most confidence? Why?