Interpreting regression results (adapted from an example by G. Benston, The Accounting Review 41, pp. 657-72). The Chevez Company manufactures widgets and digits. Chevez assembles the widgets in batches, but makes digits one at a time.

Chevez believes that the cost of producing widgets is independent of the number of digits produced in a week. The firm gathered cost data for 156 weeks. The following notation is used:

C = Total manufacturing costs per week N = Number of widgets produced during a week B — Average number of widgets in a batch during the week D = Number of digits produced during the week A multiple linear regression fitted to the observations gave the following results:

a. According to the regression results, how much are weekly costs expected to increase ift he number of widgets increases by 1 ?

b. What are the expected costs for the week if Chevez produces 500 widgets in batches of 20 each and produces 300 digits during the week?

c. Interpret the negative coefficient $(7.83) estimated for the variable B.

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C = $265.80+ $8.21N $7.838 $12.32D