Fifth edition Alnoor Bhimani Charles T. Horngren Srikant M. Datar Madhav V. Rajan Farah Ahamed

Solution Exhibit Ab Plot of number of academic programmes versus overhead costs (in thousands. Solution Exhibit B

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• Solution Exhibit Cb Comparison of alternative cost functions for overhead costs estimated with simple regression for Ecole Supérieure des Mines. Criterion

Solution Exhibit Ab Plot of number of academic programmes versus overhead costs (in thousands. Solution Exhibit B Plot of number of enrolled students versus overhead costs (in thousands. Bhimani, Horngren, Datar and Rajan, Management and Cost Accounting, 5 th Edition, Instructor’s Manual © Pearson Education Limited 2012 Solution Exhibit Cb Comparison of alternative cost functions for overhead costs estimated with simple regression for Ecole Supérieure des Mines. Criterion Cost function 1: number of academic programmes as independent variable Cost function 2: number of enrolled students as independent variable 1 Economic plausibility A positive relationship between overhead costs and number of academic programmes is economically plausible at Ecole Supérieure des Mines. A positive relationship between overhead costs and number of enrolled students is economically plausible at Ecole Supérieure des Mines. 2 Goodness of fit r2 = 0.72 Excellent goodness of fit. r2 = 0.55 Good goodness of fit, but not as good as for number of academic programmes. 3 Significance of independent variables) t-value of 5.08 is significant. t-value of 3.53 is significant. 4 Specification analysis of estimation assumptions Plot of the data indicates that assumptions of linearity, constant variance, independence of residuals and normality of residuals hold, but inferences drawn from only 12 observations are not reliable Durbin–Watson statistic = 1.81 indicates that independence of residuals holds. Plot of the data indicates that assumptions of linearity, constant variance and normality of residuals hold, but inferences drawn from only 12 observations are not reliable the Durbin–Watson statistic = 0.77 indicates that independence of residuals does not hold. 144 © Pearson Education Limited 2012 Download 1.72 Mb. Share with your friends: