Methods of Estimating Costs: Multiple Regression
Multiple regression results from the data of Adriana Corporation are as follows:
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Equation: Overhead = $124,570 + ($31.93 × Labor hours) + ($41.10 × Machine hours) Statistical data |
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Correlation coefficient |
.982 |
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R 2 |
.964 |
Required
Estimate overhead using the multiple regression results, assuming that the company expects the plant to operate at a monthly average of 9,000 machine hours and 3,000 labor hours next year.