Method of Least Squares Using Computer Spreadsheet Program The controller for Beckham Company believes that the number of direct labour hours is associated with overhead cost. He collected the following data on the number of direct labour hours and associated factory overhead cost for the months of January through August. Month Number of Direct Labour Hours Overhead Cost ($) January 1,378 55,500 February 1,400 55,900 56,500 March 1,440 April 1,380 55,700 1,360 May 55,700 54,100 June 1,180 July 1,500 57,200 August 1,350 56,080 Required: 1. Using a computer spreadsheet program such as Excel, run a regression on these data. In your calculations (when required) carry out values to eight decimal places. Enter the amount of the intercept (rounded to the nearest whole dollar) and the amount of the X Variable 1 (rounded to the nearest cent) Intercept: $ X Variable 1: $ 2. Using your results from Requirement 1, write the cost formula for overhead cost. (You may round the fixed cost to the nearest dollar and the variable rate to the nearest cent.) + ( $ Overhead cost = 3. What is R2 based on your results? Round your answer to one decimal place. Do you think that the number of direct labour hours is a good predictor of factory overhead cost? 4. Assuming that expected September direct labour hours are 1,450, what is expected factory overhead cost using the cost formula in Requirement 2?

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