Photon Dynamics has run two simple regressions and one multiple regression to es
ID: 2419399 • Letter: P
Question
Photon Dynamics has run two simple regressions and one multiple regression to estimate FOH costs: the simple regressions use # of units produced and the # of machine hours as the independent variables whereas the multiple regression uses both variables. The outputs of these 3 regressions are provided below:
Simple regressiom
(units)
Simple regression
(machine hours)
Multiple regression
(both variables)
State the best cost estimation model to estimate FOH costs?
Question 15 options:
Y = $3,000 + 0.89 (# of units)
Y = $2,600 + 1.82 (# of m/c hours)
Y = $3,200 + 1.80 (# of units) + 4.90 (# of m/c hours)
Y = $3,200 + 2.5 (# of units) + 1.82 (# of m/c hours)
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Question 16 (2.5 points)
Use the following information to answer questions 15 –17
Photon Dynamics has run two simple regressions and one multiple regression to estimate FOH costs: the simple regressions use # of units produced and the # of machine hours as the independent variables whereas the multiple regression uses both variables. The outputs of these 3 regressions are provided below:
Simple regressiom
(units)
Simple regression
(machine hours)
Multiple regression
(both variables)
Using the best cost estimation model determine the estimated FOH costs if Photon expects to produce 300 units and use 50 m/c hours?
Question 16 options:
$3,750
$3,985
$2,691
$4,760
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Question 17 (2.5 points)
Use the following information to answer questions 15 –17
Photon Dynamics has run two simple regressions and one multiple regression to estimate FOH costs: the simple regressions use # of units produced and the # of machine hours as the independent variables whereas the multiple regression uses both variables. The outputs of these 3 regressions are provided below:
Simple regressiom
(units)
Simple regression
(machine hours)
Multiple regression
(both variables)
Which of the following statements is false (with respect to the best model)?
Question 17 options:
92% of the variation in FOH costs can be explained by changes in the # of units produced and the # of m/c hours used
FOH costs are estimated to increase by $1.80 for every additional unit produced
The estimated amount of fixed FOH costs is $3,985
FOH costs are estimated to increase by $4.90 for every additional m/c hour used
ItemSimple regressiom
(units)
Simple regression
(machine hours)
Multiple regression
(both variables)
Intercept $3,000 $2,600 $3,200 R2 0.89 0.67 0.92 Coefficient/slope $2.50 $1.82 $1.80 (units) $4.90 (machine hours)Explanation / Answer
Answer 15 :-
Factory Overeads under all the four Options is as under :-
1)
2)
3)
4)
So, Option (c) is the correct answer, as it takes into account both the variable of allocation of expense.
Answer 16 :-
Using the above analysis of all the options for 300 units and 50 machine hours, option (b) i.e. 3985$ is the correct answer
Answer 17 :-
Option (c) is the correct answer as Fixed overhead is much less than 3985$
Fixed Overhead 3000 Variable Overhead 267 Total 3267