Question
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 | Machine Hours | Electricity Costs | ||
| January | 2,600 | $ | 18,450 | |
| February | 3,000 | $ | 21,100 | |
| March | 2,000 | $ | 13,550 | |
| April | 3,200 | $ | 23,100 | |
| May | 3,900 | $ | 28,300 | |
| June | 3,400 | $ | 22,100 | |
| July | 4,200 | $ | 24,800 | |
| August | 3,600 | $ | 22,800 | |
| September | 2,100 | $ | 15,600 | |
| October | 3,800 | $ | 26,100 | |
| November | 4,800 | $ | 31,100 | |
| December | 4,300 | $ | 27,800 | |
| Summary Output | |
| Regression Statistics | |
| Multiple R | 0.965 |
| R Square | 0.931 |
| Adjusted R2 | 0.924 |
| Standard Error | 1,433.89 |
| Observations | 12.00 |
| Coefficients | Standard Error | t Stat | P-value | Lower 95% | Upper 95% | |
| Intercept | 3,227.67 | 1,741.27 | 1.85 | 0.09 | (652.13) | 7,107.46 |
| Machine Hours | 5.77 | 0.50 | 11.63 | 0.00 | 4.67 | 6.88 |
If the controller uses regression analysis to estimate costs, the estimate of the fixed portion of electricity costs is:
Multiple Choice
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Fixed Cost = $5.77.
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Fixed Cost = $1,741.27.
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Fixed Cost = $1,433.89.
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Fixed Cost = $3,227.67.
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Introduction To Business Statistics
Authors: Ronald M. Weiers
7th Edition
978-0538452175, 538452196, 053845217X, 2900538452198, 978-1111524081
