Required:

1. Prepare a scattergraph by plotting power costs against machine hours. Does the scattergraph show a linear relationship between machine hours and power cost?

2. Using the high and low points, compute a power cost formula.

3. Use the method of least squares to compute a power cost formula. Evaluate the coefficient of determination.

4. Rerun the regression and drop the point (20,000; $26,000) as an outlier. Compute the results from this regression to those for the regression in Requirement 3. Which is better?