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
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.982
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R 2
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.964
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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.