A company used the method of least squares to develop a cost equation to predict the cost of receiving. There were eighty data points for the regression, and the following computer output was generated

Required:
1. What is the cost formula?
2. Using the cost formula, predict the cost of receiving if 10,000 orders are processed. Now prepare a 95 percent confidence interval for this prediction.
3. What percentage of the variability in receiving cost is explained by the number of re¬
ceiving orders? Do you think the equation will predict well? Why or why not?

Transcribed Image Text:

Intercept Slope Coefficient of correlation Standard error $17,350 12 Yb 0.92 v $220 The activity driver used was the number of receiving orders.