Interpreting multiple regression results (Appendix 3.2). To select the most appropriate activity base for allocating overhead, Maxicana Manufacturing ran a multiple regression of several independent variables against its nonmaintenance overhead cost. The results were as follows for 24 observations:

Discuss the appropriateness of each of these variables for use as an activity base.
Which would you recommend selecting? Why?

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Variable Name Coefficient Standard Error t-Statistic Direct Labor Hours 0.876 2.686 0.326 Units of Output 10.218 5.378 1.900 Maintenance Costs $(12.786) $1.113 (11.488) Cost of Utilities $ 0.766 $0.079 9.696 Intercept 12.768 6.359 2.008 R for the Multiple Regression = 0.90