Best cost driver for overhead
Not what you're looking for?
Subject: best cost driver for overhead
Details: You are trying to determine whether machine hours or direct labor dollars would be the best cost driver for overhead costs. You run two regressions and obtain the following results:
Machine Hours:
Multiple R .39429
R Square .15547
Adjusted R Square .14964
Standard error ..44416
X Variable 6.032
Intercept 7233.07
Direct Labor $:
Multiple R .89429
R Square .79547
Adjusted R Square .28964
Standard error .44416
X Variable 11.03
Intercept 8833.07
Which variable do you belive is the best selection for a cost driver? How did you choose the best cost driver?
Purchase this Solution
Solution Summary
Machine hours and direct labor dollars are examined to find which is the best cost driver for overhead costs. To arrive at the decision two regressions are run for machine hours and direct labor dollars.
Solution Preview
Of the two, Direct Labor is a better cost driver for the overhead costs than Machine Hours.
Its R square =.79547
And
Adjusted R Square= .28964
Against the corresponding ...
Purchase this Solution
Free BrainMass Quizzes
Employee Orientation
Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.
Team Development Strategies
This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.
Understanding the Accounting Equation
These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.
Basics of corporate finance
These questions will test you on your knowledge of finance.