Week 11 workshop.docx

# Week 11 workshop.docx - Week 11 presentation Model 1...

• 4

This preview shows pages 1–3. Sign up to view the full content.

Week 11 presentation Model 1 dependent variable and independent variable Model 2 cost is dependent variable and two independent variables Simple linear regression is a model that is able to measure and study two variables. By applying this model, we could make prediction for the dependent variable, strong or weak relationship Q1: Write the equation for model 1. Use the equation in for Model 1 to estimate overhead if 50 productions are worked. Model 1: overhead = dependent variable Production runs = independent variable Fixed costs = 52675.31 So, the equation is overhead costs = 52675.31+ 518.145 (production runs) When the production run is 50, then the overhead costs = 52675.31 + 518.145 * 50 = \$78582.5588 Q2: If the actual cost is \$91,000, is this business losing control given the t value is 2.04 for 28 degrees of freedom at 95% confidence? Confidence interval estimate for the slope coefficient of production runs, to decide whether the company is losing the control At 95% level of confidence, the confidence interval for the slope coefficient of the production is (154.01,882.29), which is from Coefficients (production) +/- (t value 2.04) * (Standard error). The coefficient of production is 154.01= 518.145 – (2.04 * 178.51), 882.29 = 518.145 + (2.04 * 178.51) Therefore, when the coefficient of production is 154.01 and 882.29, the equation should be - Overhead cost equation 1 = 52675.31 + 154.01 (production) - Overhead cost equation 2 = 52675.31 + 882.29 (production) When the production is 50, - Overhead cost equation 1 = 52675.31 + 154.01 * 50 = \$60375.81 - Overhead cost equation 2 = 52675.31 + 882.29 * 50 = \$96789.81 Then, the Confidence interval estimate for actual cost = (60375.81, 96789.81), the actual cost \$91000 is in the range. Therefore, this business is not losing control and it is predictable. Note: if the range is too large, even though the actual cost is in the range, but it does not make any sense.

This preview has intentionally blurred sections. Sign up to view the full version.

Q3: Write the equation for model 2. What is the estimated overhead for 1800 machine hours are worked and 50 production runs?
This is the end of the preview. Sign up to access the rest of the document.
• Three '16
• Roger

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern