C3.43 LO 3.12 (appendix) Multiple regression: service firm (continuation of Case C3.42) After a more sophisticated analysis
Question:
C3.43 LO 3.12 (appendix) Multiple regression: service firm (continuation of Case C3.42) After a more sophisticated analysis of Greenscape's costs, Drake has access to the following additional data. Month Turf seeded (m) Individual plantings January 96000 100 February 88000 60 March 88000 80 April 102000 130 May 106000 70 June 110000 100 July 120000 120 August 100000 32 September 104000 80 October 90000 74 November 92.000 80 December 102000 120 Required Refer to the data in the previous case, as well as the additional data above. 1. Use the data for the three cost drivers to formulate a single multiple regression equation to predict total overhead cost. 2. Does the new cost model (from requirement 1) provide a more accurate estimate of total overhead cost compared to the regression analysis Drake performed (which only included DLH)? Explain your answer. 3. Consider which cost drivers should be included in the regression equation to provide the more accurate cost model. Explain your choice.
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Management Accounting Information For Creating And Managing Value
ISBN: 9781743767603
9th Edition
Authors: Kim Langfield Smith, David Smith, Paul Andon, Ronald W. Hilton