The following data were collected from the Industrial Products Manufacturing Co. Ltd.

Month Total overhead Direct labour Plant Hr Jan Feb Mar Apr May Jun y

15000 14500 15750 15250 16250 15000 I:y = 91750

¥ = 15291.7x = 886.7 REQUIRED Hr (DLH) (PH)

X 736 184 800 160 1008 168 880 176 1056 176 840 168 l:x = 5320

(a) Compute a least squares cost equation based on direct labour hours

(b) Compute the coefficient of determination (r2 ) for (a)

(c) Compare and discuss the relationship of your solution in

(a) to the equation of Total overheads= 5,758+4.7DLH+31 PH obtained by a regression using DLH and PH as variables and coefficient of determination R2

= 0.9873

(d) Estimate the total overhead for a month with 1 OOODLH and 168PH, using the equation in (c).

ICMA. PS, Part I. Quantitative Techniques, May 1979.