# The GPS Company is trying to derive a cost equation that predicts its monthly materials handling costs.

## Question:

Equation 1:

Materials-handling costs per month = $24,543.34 + ($0.027 × value of materials handled)

R-square = 54.17%

Both coefficients have p-values of 0.05 or lower.

Equation 2:

Materials-handling costs per month = $12,452.56 + ($10.45 × number of material moves)

R-square = 76.34%

Both coefficients have p-values of 0.01 or lower.

Required:

Which of these two equations do you believe better predicts GPS’s monthly materials handling costs? Why?

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**Related Book For**

## Managerial accounting

**ISBN:** 978-0471467854

1st edition

**Authors:** ramji balakrishnan, k. s i varamakrishnan, Geoffrey b. sprin