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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

  • $15,375.

  • $22,825.

  • $15,180.

  • $16,427.

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