the company has been losing market share to some of its competitors and research has

shown that their prices seem to be uncompetitive. Nicholls continues to allocate its

production overheads using bakery direct labour hours even though the production line

has been automated and there is less direct labour. Nicholls Management is seeking to

determine the driver for operating expenses for the Bakery so that its prices can become

more competitive and regain market share that was lost. To this end a more scientific

method is required for the budgeting of operational cost. The accounting department

prepared regression analysis based on three different cost drivers with the intension of

choosing the driver which would be more appropriate for the estimation of total

operations cost and lead to more competitive prices. The results of the regressions with

each of the three competing cost drivers are presented in the table below.

A regression printout is given below:

The critical t$-$value for each regression is $2\mathrm{.}155.$

Required

Write the equation for each regression.

Which of the cost drivers is the best for estimating the Farm operating cost in terms of

economic plausibility, strength of the linear relationship and statistical significance of

the slope coefficient?

Explain whether you would use simple linear regression analysis or multiple linear

regression analysis to estimate the Bakery Operating Cost.

What would be the best estimate for Bakery cost if there were $18,750$ direct labour

hours, $408,000$ kgs of ingredients used and $24,525$ Oven baking hours used?