Regression Analysis

A Company uses two different independent variables (machine-hours and number of packages) in two different regression equations to assess the costs of the packaging department. The most recent results of the two regressions are as follows:

Machine-hours:

Variable Coefficient Standard Error t-Value

Constant 748.30 341.20 2.19

Independent Variable 52.90 35.20 1.50

r2 = 0.33

Number of packages:

Variable Coefficient Standard Error t-Value

Constant 242.90 75.04 3.24

Independent Variable 5.60 2.00 2.80

r2 = 0.73

a. What are the estimating equations for each cost driver?

b. Which cost driver is best based on the r2 measure?