Question
The manager of the main laboratory facility at CenterHealth Center is interested in being able to predict the overhead costs each month for the lab.
The manager of the main laboratory facility at CenterHealth Center is interested in being able to predict the overhead costs each month for the lab. The manager believes that total overhead varies with the number of lab tests performed but that some costs remain the same each month regardless of the number of lab tests performed.
After running a regression analysis on the first seven months of the year, the manager of the main laboratory facility at CenterHealth Center collects seven additional months of data. The number of tests performed and the total monthly overhead costs for the lab follow:
Regression analysis
Month | Number of Lab Tests Performed | Total Laboratory Overhead |
---|---|---|
August. . . . . . . | 3,600 | $25,600 |
September. . . . | 3,950 | $27,700 |
October. . . . . . | 4,600 | $29,450 |
November. . . . | 4,250 | $28,100 |
December. . . . | 4,300 | $29,000 |
January. . . . . . | 2,200 | $20,400 |
February. . . . . | 3,100 | $22,050 |
Read the requirements:
Use Excel to do the following:
a. | Run a regression analysis using data for August through February. |
b. | Determine the lab's cost equation (use the output from the regression analysis you performed using Excel). |
c. | Determine the R-square using the Excel output you obtain. What does the lab's R-square indicate? |
d. | Predict the lab's total overhead costs for the month if 2,700 tests are performed. |
.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started