Multiple Regression Ginnian and Fitch a regional accounting

Multiple Regression Ginnian and Fitch, a regional accounting firm, performs yearly audits on a number of different for-profit and not-for-profit entitles. Two years ago, Luisa Mellina, Ginnian\'s partner in charge of operations, became concerned about the amount of audit time required by not-for-profit entities. As a result, she instituted a serles of training programs focusing on the auditing of not-for-profit entities. Now, she would like to see if the training seemed to work. So, she ran a multiple regression on 22 months of data for Ginnian for three variables: the total monthly cost of audit professional time, the number of not-for-profit audits, and the hours of training in the audit of not-for-profit entities. The following printout was obtained: t for Ho Pr> t 0.0001 0.0050 0.0250 Standard Error of Parameter 345.00 27.45 Parameter=0 Parameter Intercept Number of not-for-profit audits Hours of training R2 0.79 Se12,030 Observations: 22 Estimate 286,700 790 -45.50 70.00 3.60 5.13

Solution

1.     Y     = $286,700 + $790X₁ – $45.50X₂

        where    Y     = Total monthly cost of audit professional time

                       X₁    = Number of not-for-profit audits

                       X₂    = Number of hours of audit training

2.     Y     = $286,700 + $790(9) – $45.50(130)

               = $287,895

Note: Since training program has effect of cost reduction so it should be – sign in equation, and cost should be reduced for training hours by 45.50 per training hour. Please confirm whether the answer is matching with your software, if any problem please asks in comment. Thank You.