Yancy Company manufactures chairs. Because the efforts of manufacturing are approximately equal between labor and machinery, management is considering other possible cost drivers. By considering different cost drivers, it is anticipated that the estimating process can be improved. The following cost estimating equations with their r2 values have been determined for 2017:

1. X = cutting timeY = $19,500 + $20Xr2 = 0.65
2. X = laborY =$5,000 + $25Xr2 = 0.49
3. X = machineryY = $44,500 +$5Xr2 = 0.55

Required:

In the text field, answer the three questions below.

a)Which equation should be selected for the analysis?

b)Why might you want to consider other factors?

c)What other factors should be included in the selection of the estimating equation?