Question

A cost accountant is developing a regression model to predict the total cost of producing a batch of printed circuit boards as a linear function of batch size (the number of boards produced in one lot or batch), production plant (Kingsland, and Yorktown), and productin shift (day, and evening). The response variable in this model is ____

a) bath size
b) production shift
c) total cost
d) variable cost

Answer 1

The response variable in the regression model is c) total cost. In this model, total cost is predicted based on other factors such as batch size and production shift, making it the dependent variable.

Step-by-step explanation:

The response variable in a regression model that is being developed to predict the total cost of producing a batch of printed circuit boards as a linear function of batch size, production plant, and production shift is c) total cost. This is because, in the context of the regression model, the total cost is what we are attempting to predict based on the other factors given, like batch size and shift times. Hence, factors such as production plant and shift are considered independent variables, while the total cost is the dependent variable, which is affected by the independent variables.

Variable costs are pertinent in calculating total cost, as they vary with the level of output and include expenses like labor and raw materials. Fixed costs, on the other hand, do not change with the level of production and are present even at zero output. When looking at profitability, if a firm's average variable cost of production is lower than the market price, excluding fixed costs, then it would be earning profits.

Answer 2

Option C is the right answer

Step-by-step explanation:

Given that a cost accountant is developing a regression model to predict the total cost of producing a batch of printed circuit boards as a linear function of batch size (the number of boards produced in one lot or batch), production plant (Kingsland, and Yorktown), and productin shift (day, and evening).

Here the prediction is for total cost and the variables affecting it are the number of boards, the production plant and the production shift.

Hence explanatory variables are the above three, while response variable is the total cost

Only total cost is the response variable

Option C is the right answer