Question: Sago Co. uses regression analysis to develop a model for predicting overhead costs. Two different cost drivers (machine hours and direct materials weight) are under

Sago Co. uses regression analysis to develop a model for predicting overhead costs. Two different cost drivers

(machine hours and direct materials weight) are under consideration as the independent variable. Relevant data were run on a computer using one of the standard regression programs, with the following results:

Coefficient Machine hours Y Intercept 2,500 B 5.0 R2= .70 Direct materials weight Y Intercept 4,600 B 2.6 R2= .50 What regression equation should be used?

a. Y = 2,500 + 5.0X

b. Y = 2,500 + 3.5X

c. Y = 4,600 + 2.6X

d. Y = 4,600 + 1.3X

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