SKILLS O EMPLOYABILITY SKILLS Scenario: DG Ltd G Ltd manufactures gaming consoles for ado- years age. The management accountant, Mrs Ruva Tamic, is keen to keep a tight control over the costs as she is working closely with the marketing director MONTH August September October November December January February March April May June July OUTPUT (X1) (UNITS) 902 950 987 1,250 1,342 1,423 1,987 2,321 750 2,665 2,210 2,342 NO. OF EMPLOYEES (X2) 90 85 100 105 103 110 123 140 78 150 118 115 You have been given the following additional information: The management accountant has been consid- ering ways to forecast the total production costs. She wants to choose one of the independent vari- ables from X1, X2 and X3 and use the least-squares regression equation to help her make this decision. Practical tasks Use a spreadsheet to complete the following tasks: 1 Using the least-squares method, calculate a and b for all the three variables. 2 Calculate the correlation coefficient, the coefficient of determination and explain what they mean for all three variables. 3 Using the values calculated in task 1, calculate how many employees, units or labour hours would have been incurred if the total cost was 875,000. who wants to enter the market with a penetration pricing strategy. They aim to have a low entry price and gain a significant market share of the gaming industry. The management accountant has been encour- aged by the marketing director to try to use regres- sion analysis to estimate the total costs. Information has been collated for the coming 12-month period up to 31 August and is presented below: ASSESSMENT MATERIAL DIRECT LABOUR (X3) (HOURS) 5,436 5,643 6,543 7,765 7,632 8,765 9,765 11,765 4,509 12,564 10,543 10,123 6 TOTAL COST Y () 234,987 265,432 276,543 245,321 276,890 296,754 271,298 310,456 230,000 312,453 306,587 304,576 4 Use the values calculated in task 1 to demonstrate how these can be used to forecast the total cost for 13,312 units, 500 employees and 522,341 labour hours. Research and presentation Using PowerPoint, provide the following: After viewing your calculation in task 4, Mrs Ruva Tamic noticed that they give very similar values. She is now confused which of the three variables would be best to use for forecasting the total cost. 5 Select and explain which is the best estimator for acquiring the forecast of the total cost from the independent variables of X1, X2 and X3. 707 graphs to demonstrate the concept of correlation and support your choice of variable.