Question : 11) Multicollinearity exists in multiple regression when two or more : 1211749

11) Multicollinearity exists in multiple regression when two or more independent variables are highly correlated with each other.

12) The t-value of a coefficient measures how large the value of the estimated coefficient is relative to its standard error.

13) The standard error of the estimated coefficient indicates how much the estimated value, b, is likely to be affected by random factors.

14) The new cost analyst in your accounting department has just received a computer-generated report that contains the results of a simple regression program for cost estimation. The summary results of the report appear as follows:

VariableCoefficientStandard Errort-Value

Constant$74.79$16.824.45

Independent variable$1,081.76$215.675.02

r2 = 0.75

Required:

a.What is the cost estimation equation according to the report?

b.What is the goodness of fit? What does it tell about the estimating equation?

15) Degen Company used least squares regression analysis to obtain the following output:

Payroll Department Cost

Explained by Number of Employees

Constant$7,540

Standard error of Y estimate819

r20.8924

Number of observations20

X coefficient(s)$2.473

Standard error of coefficient(s)0.0966

Required:

a.What is the total fixed cost?

b.What is the variable cost per employee?

c.Prepare the linear cost function.

d.What is the coefficient of determination? Comment on the goodness of fit.

16) Schotte Manufacturing Company uses two different independent variables (machine-hours and number of packages) in two different equations to evaluate costs of the packaging department. The most recent results of the two regressions are as follows:

Machine-hours:

VariableCoefficientStandard Errort-Value

Constant              $748.30              $341.20              2.19

Independent Variable              $52.90              $35.20              1.50

r2 = 0.33

Number of packages:

VariableCoefficientStandard Errort-Value

Constant              $242.90              $75.04              3.24

Independent Variable              $5.60              $2.00              2.80

r2 = 0.73

Required:

a.What are the estimating equations for each cost driver?

b.Which cost driver is best and why?

17) Arfaei 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 20X5:

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:

a.Which equation should be selected for the analysis?

b.What other factors should be included in the selection of the estimating equation?