Question: Schotte Manufacturing Company uses two different independent variables (machine-hours and number of packages) in two different equations to evaluate costs of the packaging department. The most recent results of the two regressions are as follows:

Machine-hours

Variable Coefficient Standard Error t-value

Constant $748.30 $341.20 2.19

Independent Variable $52.90 $35.20 1.50

r²=0.33

Number of packages:

Variable Coefficient Standard Error t-value

Constant $242.90 $75.04 3.24

Independent Variable $5.60 $2.00 2.80

r²=0.73

a- What are the estimating equations for each cost driver?

b- Which cost driver is best and why?