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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 | Machine Hours | Electricity Costs | ||
January | 2,500 | $ | 18,400 | |
February | 2,900 | 21,000 | ||
March | 1,900 | 13,500 | ||
April | 3,100 | 23,000 | ||
May | 3,800 | 28,250 | ||
June | 3,300 | 22,000 | ||
July | 4,100 | 24,750 | ||
August | 3,500 | 22,750 | ||
September | 2,000 | 15,500 | ||
October | 3,700 | 26,000 | ||
November | 4,700 | 31,000 | ||
December | 4,200 | 27,750 | ||
Summary Output | |
Regression Statistics | |
Multiple R | 0.965 |
R Square | 0.932 |
Adjusted R2 | 0.925 |
Standard Error | 1,425.18 |
Observations | 12.00 |
Coefficients | Standard Error | t Stat | P-value | Lower 95% | Upper 95% | |
Intercept | 3,726.88 | 1,682.82 | 2.21 | 0.05 | (22.69) | 7,476.45 |
Machine Hours | 5.77 | 0.49 | 11.7 | 0.00 | 4.67 | 6.87 |
Based on the results of the high-low analysis, the estimate of electricity costs in a month with 2,200 machine hours would be:
Multiple Choice
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$15,375.
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$22,825.
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$15,180.
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$16,427.
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