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Multiple Regression Ginnian and Fitch, a regional accounting firm, performs yearly audits on a number of different for - profit and not - for -
Multiple Regression
Ginnian and Fitch, a regional accounting firm, performs yearly audits on a number of different forprofit and notforprofit
entities. Two years ago, Luisa Mellina, Ginnian's partner in charge of operations, became concerned about the amount of
audit time required by notforprofit entities. As a result, she instituted a series of training programs focusing on the auditing
of notforprofit entities. Now, she would like to see if the training seemed to work. So she ran a multiple regression on
months of data for Ginnian for three variables: the total monthly cost of audit professional time, the number of notforprofit
audits, and the hours of training in the audit of notforprofit entities. The following printout was obtained:
Observations:
Required:
Write out the cost equation for Ginnian's audit professional time.
$$
If Ginnian expects to have audits of notforprofits next month and expects that audit professionals will have a total of
hours of notforprofit training, what is the anticipated cost of professional time?
$
Are the hours spent auditing notforprofit entities positively or negatively correlated with audit professional costs?
Is percentage of experienced team members positively or negatively correlated with audit professional cost?
Overall, based on your evaluation of the cost equation that was developed for the cost of audit professionals, which
statement is most correct?
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