Interpreting regression results. The output of a regression of overhead costs on direct labor costs per month follows:

Mr. Lee's Plumbing Company plans to operate at a level that would call for direct labor costs of $14,000 per month for the coming year.

a. Use the regression output to write the overhead cost equation.

b. Based on the cost equation, compute the estimated overhead cost per month for the coming year.

c. (Appendix 3.2) How well does this regression explain the relation between direct labor and overhead ?

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Regression Results Equation: Intercept Slope Statistical Data: R $22.500 1.45 0.85