eBook Print Item Multiple Regression, Confidence Intervals, Reliability of Cost Formulas Randy Harris, controller, has been given the charge to implement an advanced cost management system. As part of this process, he needs to identify activity drivers for the activities of the firm. During the past four months, Randy has spent considerable effort identifying activities, their associated costs, and possible drivers for the activities' costs. Initially, Randy made his selections based on his own judgment using his experience and input from employees who perform the activities. Later, he used regression analysis to confirm his judgment. Randy prefers to use one driver per activity, provided that an A of at least 80 percent can be produced. Otherwise, multiple drivers will be used, based on evidence provided by multiple regression analysis. For example, the activity of inspecting finished goods produced an R of less than 80 percent for any single activity driver. Randy believes, however, that a satisfactory cost formula can be developed using two activity drivers: the number of batches and the number of inspection hours. Data collected for a 14-month period are as follows: Inspection Costs Hours of Inspection Number of Batches 10 $17,609 100 18.350 120 20 13,125 60 20,000 320 30.560 240 31,755 200 40,750 20 29,500 230 47530 559 222222225 15 30 10 35 50 Check My Wark E E O O Previous Noit 66 Cloudy S a 40 301 PM 1/28/2022