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Problem 5-50 Interpretation of Regression Results: Multiple Choice (LO 5-5) The Business School at Eastern College is collecting data as a first step in the

Problem 5-50 Interpretation of Regression Results: Multiple Choice (LO 5-5)

The Business School at Eastern College is collecting data as a first step in the preparation of next year's budget. One cost that is being looked at closely is administrative staff as a function of student credit hours. Data on administrative costs and credit hours for the most recent 13 months follow:

Month Administrative Costs Credit Hours
July $ 129,301 340
August 82,613 319
September 228,580 1,532
October 216,394 1,778
November 258,263 1,905
December 184,449 1,780
January 219,137 2,119
February 245,000 3,367
March 209,642 2,786
April 191,925 1,731
May 249,978 2,144
June 170,418 858
July 128,167 571
Total $ 2,513,867 21,230
Average $ 193,374 1,633

The controller's office has analyzed the data and given you the results from the regression analysis:

SUMMARY OUTPUT
Regression Statistics
Multiple R .82101981
R Square .674073540
Adjusted R Square .644443860
Standard Error 31745.13900
Observations 13
ANOVA
df SS MS F Significance F
Regression 1 22926343964.00 22926343964.00 22.7500000 .0005810
Residual 11 11085292337 1007753849
Total 12 34011636301.00
Coefficients Standard Error T Stat P-value Lower 95% Upper 95%
Intercept 115556.081 18539.26329 6.23304600 .0000641 74751.4168 156360.7449
Credit Hours 47.6513400 9.9904477 4.76969017 .0005810 25.6625018 69.6401782
Required:
(a)

In the standard regression equation y = a + bx, the letter b is best described as the

Constant coefficient.
Correlation coefficient.
Dependent variable.
Independent variable
Variable cost coefficient.
(b)

In the standard regression equation y = a + bx, the letter y is best described as the

Constant coefficient.
Correlation coefficient.
Dependent variable.
Independent variable
Variable cost coefficient.
(c)

In the standard regression equation y = a + bx, the letter x is best described as the

Constant coefficient.
Correlation coefficient.
Dependent variable.
Independent variable
Variable cost coefficient.
(d)

If the controller uses the high-low method to estimate costs, the cost equation for administrative costs is (Round variable cost per hour to four decimal places for intermediate computations. Round final answers to whole dollar value.)

Cost = $165,618.00

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