An important application of regression analysis in accounting is in the estimation of cost. By collecting data on volume and cost and using the least squares method to develop an estimated regression equation relating volume and cost, an accountant can estimate the cost associated with a particular manufacturing volume.

In the Microsoft Excel Online file below you will find a sample of production volumes and total cost data for a manufacturing operation. Conduct a regression analysis to explore the relationship between total cost and production volume and then answer the questions that follow.

1. Compute b₁ and b₀ (to 1 decimal).

   b₁

   b₀

   Complete the estimated regression equation (to 1 decimal).

   =  + x

2. According to this model, what is the change in cost (in dollars) for every unit produced (to 1 decimal)?

3. Compute the coefficient of determination (to 3 decimals). Note: report r² between 0 and 1.

   r² =

   What percentage of the variation in total cost can be explained by the production volume (to 1 decimal)?

   %

4. The company's production schedule shows 500 units must be produced next month. What is the estimated total cost for this operation (to the nearest whole number)?

   $

it is always a truism that any initiative to minimum the cost of risk in societies by government would maximum the value of society resource .mention and explain the various forms of risk exposure.

Refer to Questions 2 and 3. The land for the factory will cost $610,000 . The factory will cost $8,960,000 to build and construction will take two years with construction costs payable in equal installments at the start of each year. The factory will operate for 20 years. At the end of its 20 year lifespan, the land can be resold for $230,000 . There is a 70% probability that the factory's net operating cash flows will be $1,086,599 ; however, there is a 30% chance that net cash flows will only be $660,183 . You may assume that net operating cash flows are received at the end of each year.

a) What are the Expected net operating cash flows per year? Enter Answer (1 Mark)(Round your answer to 2 decimal places)

b) What is the Internal Rate of Return for the project? Enter Answer (1 Mark)(Round your answer to one one-hundreth of a percent)

c) What is the Net Present Value of the project? Enter Answer (1 Mark)(Round your answer to 2 decimal places)

d) Should Anna recommend that the J Corporation build the factory? Yes No ↑

REFFER TOO MY OTHER ANSWERED QUESTIONS FOR QUESTION 2 AND 3

Jojo's Bizzare is taking on two projects. The cost of project A is $ 70,000 and the cost of B is $ 140,000. The firm’s cost of capital is 12% per year. After-tax cash flows are estimated to be $ 10,000 per year forever for project A. After-tax cash flow at time 1 will be $12,000 for the project B. However, the future cash flows from Project B are expected to increase by 3% per year forever. Compute NPV and IRR for both projects. Which project should Jojo's undertake? At what growth rate of future cash flows for the project B would Jojo's be indifferent? (NPVA = NPVB )? The cost of capital for both projects is still 12% per year.

An important application of regression analysis in accounting is in the estimation of cost. By collecting data on volume and cost and using the least squares method to develop an estimated regression equation relating volume and cost, an accountant can estimate the cost associated with a particular manufacturing volume. Consider the following sample of production volumes and total cost data for a manufacturing operation.

(a)

Use these data to develop an estimated regression equation that could be used to predict the total cost for a given production volume. (Round your numerical values to two decimal places.)

ŷ =  

(b)

What is the variable cost (in dollars) per unit produced?

$

(c)

Compute the coefficient of determination. (Round your answer to three decimal places.)

What percentage of the variation in total cost can be explained by production volume? (Round your answer to one decimal place.)

%

(d)

The company's production schedule shows 650 units must be produced next month. Predict the total cost (in dollars) for this operation. (Round your answer to the nearest cent.)

$

A company is considering the purchase of a new machine. The machine will cost $14,000, will result in an annual savings of $1750 with a salvage value of $500 at the end of 12 years. For a MARR of 7%, what is the benefit to cost ratio?

Question options:

A shipping company believes that the variation in the cost of a customer’s shipment can be explained by differences in the weight of the package being shipped. To investigate whether this relationship is useful, a random sample of 20 customer shipments was selected, and the weight (in lb.) and the cost (in dollars, rounded) for each shipment were recorded. The following results were obtained:

a) Construct a scatter plot for these data. What, if any, relationship appears to exist between the two variables?

b) Compute the linear regression model based on the sample data. Interpret the slope and regression coefficients.

c) Test the significance of the overall regression model using a significance level of 0.05.

d) What percentage of the total variation in shipping cost can be explained by the regression model you developed in part b?

A manager of a mattress manufacturing company with a cost of capital of 8% believes that the market is oversaturated with diamond dust mattresses. In order to get ahead of competitors, one must come up with marketing innovation. Using palladium or platinum dust may consist such an innovation. The cash flows associated with palladium- and platinum-dust mattress manufacturing are given below:

a) What is the NPV of each project?

b) Based on the above calculations please decide which project is better?