Quarter Machine Hours Power Cost 1 20,000 $26,000 2 25,000 38,000 3 30,000 42,500 4 22,000 35,000 5 21,000 34,000 6 18,000 31,400 7 24,000 36,000 8 28,000 42,000

Prepare a scattergraph by plotting power costs against machine hours. Does the scattergraph show a linear relationship between machine hours and power cost? Use scattergraph method to draw a cost line that best fits the data and estimate the cost function. Using high and low method, compute a power cost formula. Will your answer change if the power cost for Quarter8 is $42,600? Use the method of least squares to compute a power cost formula. Evaluate the coefficient of determination. Rerun the regression and drop the point (20,000; $26,000) as an outlier. Compare the results from this regression to those for the regression in Requirement 3. Which is better?