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Thane Company is interested in establishing the relationship between electricity costs and machine hours. Data have been collected and a regression analysis prepared using Excel.
Thane Company is interested in establishing the relationship between electricity costs and machine hours. Data have been collected and a regression analysis prepared using Excel. The monthly data and the regression output follow: Month January February March April May June July August September October November December Machine Hours 2,900 3,300 2.300 3,500 4,200 3,700 4,500 3,900 2,400 4,100 5,400 5,000 Electricity Costs $ 19,400 $ 23,000 $ 14,500 $ 25,000 $ 29,250 $ 24,000 $ 25,750 $ 23,750 $17.500 $ 28,000 $ 33,000 $ 28,750 945 Summary Output Regression Statistics Multiple R R Square Adjusted RP Standard Error Observations 892 882 1,809.89 12.00 Coefficients 4,788,52 5.19 Intercept Machine Hours Standard Error 2,20713 0.57 t Star 2.17 9.11 R-value 0.06 Lower 95% (129.26) 3.92 Upper 95% 9,706.31 6.46 0.00 If the controller uses the high-low method to estimate costs, the variable cost per machine hour is: O $6.50. $9.11. $5.19 . $5.97
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