Refer to the data in Exercise 3-17.

Required:

1. Compute the cost formula for radiology services using the method of least squares.

2. Using the formula computed in Requirement 1, what is the predicted cost of radiology services for October for 3,500 appointments?

3. What does the coefficient of determination tell you about the cost formula computed in Requirement 1? What are the ¢ statistics for the number of tests and the intercept term? What do these statistics tell you about the choice of number of tests as the independent variable and the probability that there are fixed costs?

LO1