"Dilbert Toys (DT) makes the popular Floppin’ Freddy Frog and Jumpin ‘ Jill Junebug doll in batches. DT incurs set-up costs for each batch 0f dolls that it produces. DT uses ‘number of set-ups’ as the cost driver for set-up costs.
DT has just hired Bec Williams, an accountant. Bec thinks that ‘number of set-up hours’ might be better cost driver because the set-up time for each product is different. Bec collects the following data: (you should enter your student number(without letter)in the following box to get your own data to work on. you will get zero mark if you use the current numbers in the following table)
1- Using Excel, estimate the regression equation and provide the regression output for:
a- Set-up costs and Number of set-ups
b- Set-up costs and Number of set-up hours
2- On two different graphs plot the data and the regression lines for Question 1 (a & b).
3- Evaluate the regression models (a and b) as the cost driver and based on analysis, advise which cost driver (number of set-ups/number of set-up hours) is better and should be used by Dilbert Toys and why?