Continuation of P6-33A: regression analysis (Learning Objective 5)

Refer to Berg Industries in P6-33A.

1. Use Excel regression analysis to determine Berg Industries’ manufacturing overhead cost equation using DL hours as the cost driver. Comment on the R-square.

Estimate manufacturing overhead costs if Berg Industries incurs 24,000 DL hours in January.

2. Use Excel regression analysis to determine Berg’s manufacturing overhead cost equation using number of units produced as the cost driver. Use all of the data provided. Project total manufacturing overhead costs if Berg Industries produces 5,000 units. Which cost equation is better—this one or the one from Question 1? Why?

3. Use Excel regression analysis to determine Berg Industries’ manufacturing over¬ head cost equation using number of units produced as the cost driver. This time, remove any potential outliers before performing the regression. How does this affect the R-square? Project total manufacturing overhead costs if 5,000 units are produced.

4. In which cost equation do you have the most confidence? Why?