# Management Accounting: Statistics Problems

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The regression model presented below was developed to help a realtor better estimate the value of houses in the immediate area.

Regression Statistics

R 0.9148

R Square 0.83685

Adjusted R Square 0.79236

Standard Error 2,195.96551

Total Number Of Cases 15

ANOVA

d.f. SS MS F

Regression 3 272091090.1513 90697030.0504 18.80797

Residual 11 53044909.8487 4822264.5317

Total 14 325136000.0000

Coefficients Standard Error t Stat p-level

Intercept 165,456.71 5834.6162 28.3578 0.0000

Living Area (Square Feet) 10.57 3.0589 3.4543 0.0054

Age (Years) -309.64 89.9571 -3.4421 0.0055

# of Bedrooms -597.65 715.3044 -0.8355 0.4212

Based on these results, and assuming the realtor wished to estimate the value of a home with 2,334 square feet of living area is 39 years old and has 4 bedrooms, which of the following statements is correct?

a. The estimated value of the home is $204,585

b. 91.48% of the change in the value of the home can be explained by changes in the living

area, age of the home and the number of bedrooms

c. This model cannot be used to estimate the value of a home as there are t-stat values

that are less than 2.0

d. The estimated value of the home is $175,661

e. The estimated value of the home is $190,118

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##### Solution Summary

This solution assists with the statistics problems related to management accounting.

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Regression equation

Y = 165,456.71 + 10.57* square feet - 309.64* age - ...

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