Assignment:
Subject: Best cost driver for overhead
Details: You are trying to determine whether machine hours or direct labor dollars would be the best cost driver for overhead costs. You run two regressions and obtain the following results:
Machine Hours:
Multiple R .39429
R Square .15547
Adjusted R Square .14964
Standard error ..44416
X Variable 6.032
Intercept 7233.07
Direct Labor $:
Multiple R .89429
R Square .79547
Adjusted R Square .28964
Standard error .44416
X Variable 11.03
Intercept 8833.07
Which variable do you belive is the best selection for a cost driver? How did you choose the best cost driver?