Problem 2: XP Jet (Cost Estimation) Cost managers for XP Jet, maker of commercial printers, have selected the following cost drivers: units produced, labor hours, number of customer accounts maintained and number of design changes. Following is cost data for past 20 months: Month Total Costs Units Labor hours Customer Design accounts Changes $3,001,000 62,500 19,000 350 $3,023,970 56,470 17.160 335 $2,833,000 51,130 14,730 310 $2,660,050 44,940 13.080 280 $2,470,410 36,700 11.130 245 $2,515,770 43,780 11,020 230 $2,785,010 47,790 13,440 235 $2,825,310 55,160 15,500 265 $2,976,240 62,490 17,910 285 $3,051,170 67,250 19,140 310 $3,371,720 72,520 20,320 325 $3,432,340 77,380 21.470 370 $3,357,380 76,390 22.120 385 $3,288,030 70,910 21.230 360 $3,261,980 65,580 20,020 345 $3,109,190 59,910 18,570 330 $3,008,840 53,420 17,330 $2,845,260 51,120 16,040 295 $2,901,020 58,830 16,720 275 $3,211,170 69,620 19,760 325 0 14 17 315 (a) Using multiple regression, estimate the equation for total costs using the above cost drivers. What percentage of the variation in costs is explained by the regression equation? (0.5 points) (b) Assuming the following levels of cost drivers for the coming month, what is the estimated cost based on the regression equation? (0.5 points) 74,000 units 21,500 LH 390 customer accounts 2 design changes (c) If you are the plant manager, based on the output of the regression, do you believe that each individual cost driver is accurately explaining the costs incurred? If not, what could be the reason(s)? Perform relevant analysis to support your reasoning. (0.5 points) Problem 2: XP Jet (Cost Estimation) Cost managers for XP Jet, maker of commercial printers, have selected the following cost drivers: units produced, labor hours, number of customer accounts maintained and number of design changes. Following is cost data for past 20 months: Month Total Costs Units Labor hours Customer Design accounts Changes $3,001,000 62,500 19,000 350 $3,023,970 56,470 17.160 335 $2,833,000 51,130 14,730 310 $2,660,050 44,940 13.080 280 $2,470,410 36,700 11.130 245 $2,515,770 43,780 11,020 230 $2,785,010 47,790 13,440 235 $2,825,310 55,160 15,500 265 $2,976,240 62,490 17,910 285 $3,051,170 67,250 19,140 310 $3,371,720 72,520 20,320 325 $3,432,340 77,380 21.470 370 $3,357,380 76,390 22.120 385 $3,288,030 70,910 21.230 360 $3,261,980 65,580 20,020 345 $3,109,190 59,910 18,570 330 $3,008,840 53,420 17,330 $2,845,260 51,120 16,040 295 $2,901,020 58,830 16,720 275 $3,211,170 69,620 19,760 325 0 14 17 315 (a) Using multiple regression, estimate the equation for total costs using the above cost drivers. What percentage of the variation in costs is explained by the regression equation? (0.5 points) (b) Assuming the following levels of cost drivers for the coming month, what is the estimated cost based on the regression equation? (0.5 points) 74,000 units 21,500 LH 390 customer accounts 2 design changes (c) If you are the plant manager, based on the output of the regression, do you believe that each individual cost driver is accurately explaining the costs incurred? If not, what could be the reason(s)? Perform relevant analysis to support your reasoning. (0.5 points)