Yates Corp Required:
(A

question 45

Essay

Yates Corp. wants to develop a cost equation for its administrative costs. The controller believes the appropriate cost driver is units produced. Last year's data are presented below:
$\begin{array}{lcc}\text {Month}&\text {Units Produced}&\text {Administrative Costs}\\\text { January } & 32,500 & \$24,288 \\ \text { February } & 37,700 &27,720 \\ \text { March } & 24,700 &17,820 \\\text { April } & 40,300 &30,360 \\ \text { May } & 49,400 &37,290 \\ \text { June } & 42,900 &29,040 \\\text { July } & 53,300 &32,670 \\ \text { Alugust } & 45,500 &30,030 \\ \text { September } & 26,000 &20,460 \\\text { October } & 48,100 & 34,320\\ \text { November } & 61,100 &40,920 \\ \text { December } & 54,600 &36,630 \\\end{array}$

$$\begin{array}{c} { \text { SUMMARY OUTPUT } } \\ { \text { Regrerrian Statirticr } } \\\begin{array} { | l | r | } \hline \text { Multiple R } & 0.96538 \\\hline \text { R Squjare } & 0.931965 \\\hline \text { Adjusted R-Square } & 0.925162 \\\hline \text { Starddard Error } & 1,881.23 \\\hline \text { Observations } & 12 \\\hline\end{array}\end{array}$$
$$\begin{array} { | l | r | r | r | r | r | r | } \hline & \text { Coefficiend } & \begin{array} { c } \text { Standard } \\\text { Error }\end{array} & \text { t Stat } & \text { P-valke } & \begin{array} { c } \text { Lower } \\\text { 95\% }\end{array} & \text { Upper 95\% } \\\hline \text { Irtercept } & 4,919.48 & 2,221.329 & 2.21 & 0.051156 & - 29.9485 & 9,868.909 \\\hline \begin{array} { l } \text { Units } \\\text { produced }\end{array} & 0.586154 & 0.050082 & 11.70 & 3.69 \mathrm { E } - 07 & 0.474560 & 0.697743 \\\hline\end{array}$$
Required:
(a.) What is the equation for administrative costs using the regression analysis?
(b.) Does the variable "units produced" have statistical significance? Explain.
(c.) Prepare an estimate of administrative costs for a month when 30,000 units are produced.

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