ACCT 305 SUNY at Binghamton Cost Accounting Questions Instructions First, let TA, TL, E and RD represent total assets, total liabilities, earnings, and R&

ACCT 305 SUNY at Binghamton Cost Accounting Questions Instructions

First, let TA, TL, E and RD represent total assets, total liabilities, earnings, and R&D expense respectively. Next use the method of OLS to estimate following models:

Eit = ?0+?1TAitModel (1)

Eit = ?0+?1TLitModel (2)

Eit = ?0+?1RDitModel (3)

Eit = ?0+?1TAit+?2TLitModel (4)

Eit = ?0+?1TAit+?2RDitModel (5)

Eit = ?0+?1TLit+?2RDitModel (6)

Eit = ?0+?1TAit +?2TLit+?3RDitModel (7)

Where i denotes the firm, and t denotes the time. So each “it” denotes one row/observation/data point. Save each regression result in the same excel file as your data, but in a separate worksheet tab. Label each of the tabs “Data”, “Model 1”, “Model 2”, “Model 3”, etc. The goal is to identify the best model to predict/explain your dependent variable.

Given the regression result output, please answer the following questions (round any numerical answer to 4 decimal places).

Q1. What is the sample size?

Q2. What is the estimated fitted line for each of the seven regressions?

Q3. Are the coefficients on the independent variable in model (7) statistically different from zero? Please explain in detail.

Q4. What is the adjusted R-square for each of the seven regressions?

Q5. Which model is the best in explaining variation in the dependent variable? How do you arrive this conclusion?

Q6. Explain, in plain English, the meaning of the adjusted R-square for model (7).

Q7. Which one is better measurement for model fit: the adjusted R-square or the R-square? Why?

Q8. Using the coefficients from model (7), what is the error in estimation for your 13th observation?

Q9. How does the regression analysis method relate to cost accounting? Why do we care about adjusted R-squares and statistical significance in a cost accounting setting?

Q10. If you use high-low method, what is your cost estimation formula for Model (1)? What is your answer for Model (1) if you use the scattered plot method?

Only Q8,9,10 need to be answered