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Approximately 12 hours and 36 minutes Diff: 2 Terms: learning curve, cumulative averagetime learning model Objective: 6 AACSB: Analytical skills 172) The new contains the results of a simple regression program for cost estimation. The summary results of the report appear as cost follows: analyst in your Variable
Coefficient Standard Error tValue accountin
Constant
$35.92
$16.02
2.24
g Independent variable
$563.80
$205.40
2.74 departme
nt has just r2 = 0.75 received a computer Required:
generated a. What is the cost estimation equation according to the report?
report that b. What is the goodness of fit? What does it tell about the estimating equation? Answer: a. y = $35.92 +
$563.80X
b. Goodness of fit is 0.75. It measures how well the predicted values match the actual observations. In this case, the equation passes the goodness of fit test because it is substantially above 0.30, the threshold of acceptance. Diff: 1 Terms: cost estimation, simple regression Objective: A AACSB: Use of Information Technology 173) Newton Explained by Number of Employees
Company Constant
used least Standard error of Y estimate
squares r2
regression Number of observations
analysis to obtain X coefficient(s)
the Standard error of coefficient(s)
following output:
Required:
Payroll a. What is the total fixed cost?
Departm b. What is the variable cost per employee?
ent Cost c. Prepare the linear cost function. $5,800
630
0.8924
20
$1.902
0.0966 d. What is the coefficient of determination? Comment on the goodness of fit. Answer: a. The constant or intercept is the total fixed cost of $5,800.
b. The variable cost per employee is the X coefficient of $1.902.
c. y = $5,800 +
$1.902X
d. The coefficient of determination is the r2 of 0.8924. This represents a very high goodness of fit. The closer to 1.0, the better the cost driver explains the cost. Therefore, the conclusion can be drawn that there is a significant relationship between the cost of the payroll department and the number of employees. Diff: 2 Terms: cost estimation, simple regres...
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 Spring '08
 BROWN

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