Q.N.

3
a. Draw the research model and write the research hypothesis of the model.

Labor Hours

Unpaid Tax

Computer Hours

The research model has 3 variables, out of which one is dependent variable i.e. unpaid tax,
and 2 independent variables which are Labor Hours and Computer Hours. Thus, regression
model is uses to test the statistical significance of the model presented in the above diagram.

Coefficients

95.0%
Unstandardized Standardized Confidence
Coefficients Coefficients Interval for B
Std. Lower Upper
Model B Error Beta t Sig. Bound Bound
1 (Constant) 2.591 6.837 .379 .730 -19.166 24.349
Labor
.890 .249 .905 3.573 .037 .097 1.682
Hours
Computer
.059 .299 .050 .198 .856 -.893 1.011
Hours
a. Dependent Variable: Unpaid Tax

Mathematically, regression model can be expressed as:

Y = β0 + β1 X1 + β2 X2 + e …………………………… (1)

Same model can be expressed as:

Unpaid Tax = β0 + β1 Labor hours + β2 Computer Hours + error

Research hypothesis

Two research hypothesis of the model are:

H1: there is positive effect labor hours on total unpaid tax.

H2: there is positive effect Computer hours on total unpaid tax.

To test the significance of research hypothesis data were collected from 6 apartment renters
on rent, number of rooms and distance from downtown. The statistical package for the social
science (SPSS- IBM21) is used.

b) Fit the model using the above data and interpret the results.
b0= 2.591
b1 = 0.890
b2 = 0.059
Fitted regression equation Y = 2.591 + 0.890* X1 + 0.059* X2
The findings of b1 shows that there is positive relationship between unpaid tax and labor
hours with b1 = 0.890. Furthermore, if unpaid tax will be increased by Rs. 0.98 thousands
when labor is increased by 1. In addition to this the significance value of b1 (p-value) 0.037
shows that the labor hours is significant independent variable for unpaid rent.
B2=0.059
The findings of b2 shows that there is positive relationship between unpaid tax and computer
hours with b2 = 0.059. Furthermore, computer hours is increased by 1, unpaid tax also
increased by Rs. computer hours thousand. In addition to this the significance value of b1 (p-
value) 0.856 shows that the computer hours is insignificant independent variable for unpaid
tax.

c) Test the significance of the model at 5% level of significance (take the help of SPSS)

ANOVAa
Sum of Mean
Model Squares df Square F Sig.
1 Regression 414.910 2 207.455 6.410 .083b
Residual 97.090 3 32.363
Total 512.000 5
a. Dependent Variable: Unpaid Tax
b. Predictors: (Constant), Computer Hours , Labor Hours

To test the overall significance of regression model F-test is used. The findings shows that the
regression model as a whole is statistically insignificant at 5% level of significance with F (3,
3) = 6.410, Sig value = 0.083 < 0.05).

H0: β0 = β1 =0
H1: at least one regression coefficient is not significant.
Conclusion
The above data shows that there is all means are equals.
d.)Asses the model using standard error of the estimate and coefficient of determination
(take the help of SPSS)

Model Summary
Std.
Error of
R Adjusted the
Model R Square R Square Estimate
1 .900a .810 .684 5.689
a. Predictors: (Constant), Computer Hours , Labor Hours

Standard deviation of the estimate is (Se) = 5.689

The value of standard error of estimate indicated that the difference between observed and
estimated value of rent which is explained Labor hours and computer hours 5.689
Coefficient of determination (r2) = 810
The value of r2 = 0.81 indicates that 81% variation in unpaid tax is explained by number of
labor hours and computer hours remaining 19 % variation is explained by other variables
which are not considered in this model.
e.) If field audit hour is 30 and computer hour is also 30, what will be the expected
unpaid tax discovered.
Y = 2.591 + 0.890* X1 + 0.059* X2 =
=2.591+0.89*30+0.059*30
=2.591+26.7+1.77
=31.061
Note: Since VIF is less than 10 for each independent variable of the regression model so,
there is no problem of multi-colinearity in the regression model.