The controller for TG Enterprises is trying to determine whether$$direct labor hours or machine hours is driving the company$$s overhead cost. He collected the following$$data on the number of direct labor hours, the number of machine hours, and the associated factory$$overhead cost for the year $2018$:

MonthMachine

HoursDirect Labor

HoursOverhead

CostJanuary$132724$$$5,750$February$130730$$$5,685$March$131715$$$5,790$April$126685$$$5,480$May$128695$$$5,590$June$123585$$$5,430$July$135775$$$5,790$August$130680$$$5,705$September$132725$$$5,804$October$138840$$$5,976$November$128775$$$5,487$December$143825$$$6,108$

Required

a$.$Using Excel, run a regression on these data using machine hours as the independent variable.$$

Provide the cost formula for overhead cost. Round fixed and variable costs to the nearest cent.

Total cost $=$ $ Answer $1$

$+($$Answer $2$x machine hours$)$

b$.$ Using Excel, run a regression on these data using direct labor hours as the independent variable.

Provide the cost formula for overhead cost. Round the fixed and variable costs to the nearest$$cent$.$

Total cost $=$ $ Answer $3$

$+($$Answer $4$x direct labor hours$)$

c$.$What is the R$2$ for the regression in requirement a $?$ What is the R$2$ for the regression in requirement$$b$?$

$($Round answers to three decimal places.$)$

a$.$ Answer $5$

b$.$ Answer $6$

Which independent variable, direct labor hours or machine hours, is a better predictor of factory overhead cost?

Answer $7$Direct labor hoursMachine hours

d$.$ Assuming that expected January $2019$ machine hours are $150,$ what is expected factory overhead$$cost using the cost formula in requirement a$?$

$($Note: Round to the nearest dollar.$)$

$Answer $8$