ACC 3300 Regression Analysis Results

In a simple linear regression equation where units produced is used to predict electricity costs, which of the following is true?

Units produced is the independent variable and electricity costs is the dependent variable.

Which of the following concerning simple linear regression analysis is correct?

A higher coefficient of determination (R-squared) is preferred to a lower one since it measures the amount of variability in the dependent variable explained by changes in the independent variable.

Which of the following statements is not true?

A multiple linear regression is likely to be less costly than a simple linear regression model to develop.

Dawson Manufacturing developed the following multiple regression equation, utilizing many years of data, and uses it to model, or estimate, the cost of its product. Cost = FC + a × L + b × M Where: FC = fixed costs L = labor rate per hour M = material cost per pound Which one of the following changes would have the greatest impact on invalidating the results of this model?

A significant change in labor productivity.

Dawson Manufacturing developed the following multiple regression equation, utilizing many years of data, and uses it to model, or estimate, the total cost of its product. Cost = FC + L(A) + M(B) Where: FC = total fixed costs L = labor rate per hour A= number of labor hours in the product M = material cost per pound B = number of machine hours in the product Which one of the following changes would have the greatest impact on invalidating the results of this model?

A significant change in the design of the product

In a simple linear regression equation where advertising expenditures is used to predict sales, which of the following is true?

Advertising expenditures is the independent variable and sales is the dependent variable.

Maxis Tech is trying to determine how an employee's performance rating could be explained by his/her level of education (EDU), the length of employment (EMP) with the company, and the number of training (TRN) hours received. Using data from 100 of its employees, Maxis Tech performs a regression analysis with the following results: Performance rating = 0.2 + 0.32 EDU + 0.15 EMP + 0.07 TRN R2 = 0.72 t for EDU = 0.013 t for EMP = 3.276 t for TRN = 4.121 The value of these terms in the parentheses (EDU, EMP, and TRN) represent the t-statistics of the regression coefficient. Which of the following statements best describes the statistical significance of the impact of the three factors on employee performance ratings?

Both length of employment with the company and number of training hours received have statistically significant impact because the absolute values of their t-statistics are higher than the most extreme cutoff point.

How does a multiple linear regression equation differ from a simple linear regression equation?

More than one independent variable is used to predict a dependent variable in a multiple linear regression equation but only one independent variable is used to predict a dependent variable in a simple linear regression equation.

Which of the following correctly describes the use of the output from a simple linear regression analysis?

The coefficient of the "intercept" is the estimate of the fixed component of the dependent variable and the coefficient on the independent variable is the estimate of variable amount per unit of the independent variable.

Which of the following concerning simple linear regression analysis is not correct?

The coefficient of the "intercept" resulting from a regression analysis where marketing expenditures ranging from $10,000 per month to $20,000 per month and sales ranging from $250,000 per month to $600,000 per month are used is the estimated sales when marketing expenditures are zero.

The CFO of Maureen Systems prepares targets for future years using historical data. However, for the last two years, the company has failed to achieve the targeted results. In the current year, the board of directors has employed a team of analysts solely for the preparation of budgets. The new team uses a forecasted budget to set targets for the future years rather than carrying forward increases in past results based on historical data. Evaluate the validity of the new team's approach.

The new team's approach is better because the forecasted budget takes into account future conditions that were not present in past years.

In order to determine how its in-house training program is affecting its employees' performance rating, Maxis Tech performed a regression analysis with the following results: Performance rating = 0.2 + 0.05 hours of training R2 = 0.1 Given the above information, Maxis Tech can conclude that:

There are factors other than number of training hours received that can better explain an employee's performance rating.

A time series analysis shows that company revenues decline during recessions and sales increase dramatically during expansions. This pattern is an example of:

a cyclical pattern.

The regression equation is Y = a + bX. Which of the following is true?

a represents the amount of Y when X = 0

A time series analysis shows a spike in revenues during the last quarter of every year. This pattern is an example of:

a seasonal pattern.

A time series analysis shows that sales have risen steadily over the last ten years. This is an example of:

a trend line.

Automite company is an automobile replacement parts dealer in a large metropolitan community. Automite is preparing its sales forecast for the coming year. Data regarding both Automite's and industry sales of replacement parts as well as both the used and new automobile sales in the community for the last 10 years have been accumulated. If Automite wants to determine if its sales of replacement parts are patterned after the industry sales of replacement parts or to the sales of used and new automobiles, the company would employ:

correlation and regression analysis.

Regression analysis:

estimates the dependent cost variable.

A time series analysis:

is a regression analysis with time as the independent variable.

A company has accumulated data for the last 24 months in order to determine if there is an independent variable that could be used to estimate shipping costs. Three possible independent variables being considered are packages shipped, miles shipped, and pounds shipped. The quantitative technique that should be used to determine whether any of these independent variables might provide a good estimate for shipping costs is:

linear regression.

For cost estimation simple regression differs from multiple regression in that simple regression uses only:

one independent variable, while multiple regression uses more than one independent variable.

A time series analysis of a business's sales show a decline in sales every summer, with a peak during the winter. These results could be:

seasonal fluctuations

Automite company is an automobile replacement parts dealer in a large metropolitan community. Automite is preparing its sales forecast for the coming year. Data regarding both Automite's and industry sales of replacement parts as well as both the used and new automobile sales in the community for the last 10 years have been accumulated. If Automite wants to determine if there is a historical trend in the growth of its sales as well as the growth of industry sales of replacement parts, the company would employ:

time series analysis.