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Item14 Item14 Item 14 Burmer Co. has accumulated data to use in preparing its annual profit...

Item14

Item14

Item 14

Burmer Co. has accumulated data to use in preparing its annual profit plan for the upcoming year. The cost behavior pattern of the maintenance costs must be determined. Data regarding the machine hours and maintenance costs for the last year and the results of the regression analysis are as follows:

Month Maintenance Cost Machine Hours
Jan. $ 5,040 620
Feb. 3,600 420
Mar. 4,320 520
Apr. 3,380 390
May 5,220 650
June 3,550 400
July 3,640 430
Aug. 5,360 680
Sept. 5,110 640
Oct. 4,860 610
Nov. 3,960 460
Dec. 3,790 440
Sum $ 51,830 6,260
Average $ 4,319 522

A staff assistant has run regression analyses on the data and obtained the following output using Excel:

REGRESSION ANALYSIS

Y (Dependent) Variable: Maintenance Cost
X (Independent) Variable: Maintenance Hours

Regression Statistics
Multiple R 0.998210294
R Square 0.996423791
Adjusted R Square 0.99606617
Standard Error 47.0629563
Observations 12
ANOVA
df SS MS F Significance F
Regression 1 6171342.448 6171342 2786.257 1.44166E-13
Residual 10 22149.21856 2214.922
Total 11 6193491.667
Coefficients Standard Error t Stat P-value Lower 95% Upper 95%
Intercept 783.7782188 68.34114772 11.46861 4.47E-07 631.504653 936.051785
Hours 6.777102456 0.12839066 52.78501 1.44E-13 6.491030239 7.06317467



The p-value is a measure of:

Multiple Choice

  • The linearity in the data.

  • The reliability of the independent variable.

  • The accuracy of the regression predictions.

  • The precision of regression

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