Silmarillion Corporation has collected data on some of its activities for the past sixteen months. Specifically, for each month, Silmarillion has collected the total overhead cost incurred and the labor hours.

The company uses regression analysis to develop a predictive model of the costs, and believes that labor hours are a reasonable cost driver for overhead costs.

The output of that regression is provided here:

Count = 16

R-squared = 0.794

Adjusted R-squared = 0.765

	Coefficient	Std Error	t-value	p-value
Intercept	11,511	1,244	5.12	0.01
Labor hours	462	116	6.10	0.01

A..Using the above regression analysis (which includes overhead costs as the dependent variable), predict the overhead cost for a future month if 140 labor hours are forecasted for that month.

B..Using only the above information provided in Part 1 above, how comfortable are you with the resulting predicted cost you provided as your answer to item (A)? Use elements of the regression output to support your answer.