Question
Burmer Co. has accumulated data to use in preparing its annual profit plan for the upcoming year. The cost behavior pattern of the maintenance costs
Burmer Co. has accumulated data to use in preparing its annual profit plan for the upcoming year. The cost behavior pattern of the maintenance costs must be determined. Data regarding the machine hours and maintenance costs for the last year and the results of the regression analysis are as follows:
MonthMaintenance CostMachine HoursJan.$5,040620Feb.3,600420Mar.4,320520Apr.3,380390May5,220650June3,550400July3,640430Aug.5,360680Sept.5,110640Oct.4,860610Nov.3,960460Dec.3,790440Sum$51,8306,260Average$4,319522
A staff assistant has run regression analyses on the data and obtained the following output using Excel:
REGRESSION ANALYSIS
Y (Dependent) Variable: Maintenance Cost
X (Independent) Variable: Maintenance Hours
Regression StatisticsMultiple R0.998210294R Square0.996423791Adjusted R Square0.99606617Standard Error47.0629563Observations12ANOVAdfSSMSFSignificance FRegression16171342.44861713422786.2571.44166E-13Residual1022149.218562214.922Total116193491.667CoefficientsStandard Errort StatP-valueLower 95%Upper 95%Intercept783.778218868.3411477211.468614.47E-07631.504653936.051785Hours6.7771024560.1283906652.785011.44E-136.4910302397.06317467
The statistic that indicates precision of the regression is:
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An Introduction to the Mathematics of financial Derivatives
Authors: Salih N. Neftci
2nd Edition
978-0125153928, 9780080478647, 125153929, 978-0123846822
