Question

An independent health clinic's managers want to better understand its costs associated with x-rays. The clinic accountant assembled cost information and conducted a regression analysis that produced the following output:

Regression Statistics

Multiple R                 0.919

R Square                   0.846

Adjusted R Square   0.824

Standard Error   1442.971

Observations          9

                 Coefficients Standard Error t Stat      P-value

Intercept 10,339.86     2077.02            4.97           0.001604

X-Rays           2.70           0.40            6.21            0.000441

a. Provide an explanation of why you think this model appears to explain the variation between observations of x-ray expenses well, or not.

b. Provide an estimate of the total costs for x-rays for a period in which the clinic expects to perform 7,500 x-rays. (Show your calculations.)

Answer 1