Carpet Company's ABC analysis indicates that Manufacturing overhead costs include large costs incurred for setups when a new batch of carpet is started.
In the past the company has used Direct Manufacturing labor hours as the cost driver for Manufacturing Overhead costs, but you have been recently
hired as a consultant and have decided to use your new MBA skills to make a recommendation to management on what should be the cost driver(s) for
manufacturing overhead costs.
Week	Number of Batches	Direct Manufacturing Labor-Hours	Manufacturing Overhead Cost
1	12	30	$ 1,190
2	15	72	1,211
3	13	36	1,004
4	11	20	917
5	12	45	1,456
6	16	44	1,180
7	7	38	710
8	14	70	1,316
9	12	30	1,032
10	7	29	752
11	8	33	800
12	10	35	865
Do not retype the information above. You should use this sheet as your data sheet and your solution should be on separate
sheets.
Part 2 should contain 2-simple regression tables, 1-multiple regression table, and 2-scattergraphs when you are done.--I have done one of the scattergraphs and simple regression using direct labor for you.
Required:
1. Prepare 2 scattergraphs and 2 simple regression analyses***** to estimate the Manufacturing Overhead costs using each of the
cost drivers above. Make sure you show the equation of the line and R-squared on each of your scattergraphs.
I have gone ahead and developed the simple regression table and the scattergraph using Direct Manufacturing labor hours as the cost driver (I.e. independent variable)
You do not need to redo these, but you may want to use these as a verification that you know how to develop a scattergraph and a simple regression table.
The output and chart for your simple regression should be on separate sheets that should be named appropriately.
Type the equation of the line under the regression output on each of the simple regression worksheets.
To make a scattergraph with data from nonadjacent columns highlight the X data (i.e. independent variable-cost driver) first and then hold down the
control (ctrl) key and highlight the Y data (i.e. the dependent variable-cost).
If you have done your scattergraphs correctly the equation of the line and the R-squared should match the output you have on your regression table.
(i.e. R-squared, Intercept, and X Variable.) Hint: the Y(dependent) variable is the same in all your scattergraphs and regression analyses--which is Manufacturing overhead cost.
2. Prepare a multiple regression table using batches and direct labor hours for the independent variables. Do not try to prepare a scattergraph, since you cannot make a chart with multiple X's.
Using the output from the multiple regression, give the equation to estimate manufacturing overhead costs in terms of these
2 cost drivers. Type out the equation of the line on your multiple regression worksheet.
X1	Number of batches
X2	Direct Manufactuirng labor hours
3. Assuming the following level of cost-driver volume, what is the estimated Manufacturing overhead
cost using simple regression for each of the cost drivers and using multiple regression. You should have
3 computations for this answer. I have completed one of the answers for you. You must use cell referencing from your regression tables to compute the estimated cost to earn credit for part 3.
Cost Drivers (independent variables):
Number of batches		14
Direct Manufacturing labor hours		40
Solution:
		Direct Manufacturing labor hours
		Answer:
		$ 1,034.65
		You need to answer:
		Number of batches
		Answer:
		Multiple regression
		Answer
4. Using the simple and multiple regression analyses output tables, what independent variable(s) would you recommend
to estimate the Indirect Manufacturing Overhead Costs? Why? Your response should be at least 75 words and discuss the R-Squared.