Question #7: Regression Analysis Salma 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: Month Machine Hours Jan. Maintenance Cost $5,040 3,600 620 Feb. 420 Mar. 4,320 Apr. 3,380 390 May 5.220 650 June 400 3,550 3,640 July 430 Aug. 5,360 680 Sept. 5.110 640 Oct. 4,860 610 Nov. 3,960 460 Dec. 3,790 440 Sum $51,830 6,260 Average $4,319 522 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 Statistics Multiple R 0.998210294 0.996423791 R Square Adjusted R Square 0.99606617 Standard Error 47.0629563 Observations 112 ANOVA df SS 6171342.448 MS 6171342 Significance F 1.44166E-13 Regression 2786.257 Residual 10 22149.21856 2214.922 Total 11 6193491.667 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Intercept 783.7782188 68.34114772 11.46861 4.47E-07 631.504653 936.051785 Hours 6.777102456 0.12839066 52.78501 1.44E-13 6.491030239 7.06317467 Required: . Using regression analysis, what is the estimated maintenance expense for a month that the firm expects to operate 600 machine hours? How will this change in the wake of crisis such as Covid-19? Identify and comment on the measure of the statistical reliability of each independent variable. What terms are most commonly used when it is said that "that two or more independent variables are highly correlated with each other"? What is the significance of R and R2 in the table above Question #7: Regression Analysis Salma 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: Month Machine Hours Jan. Maintenance Cost $5,040 3,600 620 Feb. 420 Mar. 4,320 Apr. 3,380 390 May 5.220 650 June 400 3,550 3,640 July 430 Aug. 5,360 680 Sept. 5.110 640 Oct. 4,860 610 Nov. 3,960 460 Dec. 3,790 440 Sum $51,830 6,260 Average $4,319 522 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 Statistics Multiple R 0.998210294 0.996423791 R Square Adjusted R Square 0.99606617 Standard Error 47.0629563 Observations 112 ANOVA df SS 6171342.448 MS 6171342 Significance F 1.44166E-13 Regression 2786.257 Residual 10 22149.21856 2214.922 Total 11 6193491.667 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Intercept 783.7782188 68.34114772 11.46861 4.47E-07 631.504653 936.051785 Hours 6.777102456 0.12839066 52.78501 1.44E-13 6.491030239 7.06317467 Required: . Using regression analysis, what is the estimated maintenance expense for a month that the firm expects to operate 600 machine hours? How will this change in the wake of crisis such as Covid-19? Identify and comment on the measure of the statistical reliability of each independent variable. What terms are most commonly used when it is said that "that two or more independent variables are highly correlated with each other"? What is the significance of R and R2 in the table above
