Thane Company Is Interested in Establishing the Relationship Between Electricity

question 61

Multiple Choice

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:
$\begin{array}{lll}\text {Month}&\text {Machine Hours}&\text {Electricity Costs}\\\text { January } & 2,500 & \$ 18,400 \\\text { February } & 2,900 & 21,000 \\\text { March } & 1,900& 13,500 \\\text { April } & 3,100 & 23,000 \\\text { May } & 3,800& 28,250 \\\text { June } & 3,300& 22,000 \\\text { July } & 4,100 & 24,750\\\text { August } & 3,500 & 22,750 \\\text { September } & 2,000 & 15,500 \\\text { October } & 3,700 & 26,000 \\\text { November } & 4,700 & 31,000 \\\text { December } & 4,200 & 27,750\end{array}$



$$\begin{array}{c} { \text { Semmary Output } } \\ { \text { Regrencion Statirticr } } \\\begin{array}{ | l | c | } \hline \text { Multiple R } & 0.965 \\\hline \text { R Squuare } & 0.932 \\\hline \text { Adjusted R } ^2 & 0.925 \\\hline \text { Standard Error } & 1,425.18 \\\hline \text { Observations } & 12.00 \\\hline\end{array}\end{array}$$

$\begin{array}{|l|r|r|r|r|r|r|}\hline && \text { Standard } & && \text { Lower } & \text { Upper } \\&\text { Coefficients } & \text { Error } & \text { t Stat } & \text { P-value } & 95 \% & 95 \% \\ \hline \text { Intercept } & 3,726.88 & 1,682.82 & 2.21 & 0.05 & (22.69) & 7,476.45 \\\hline \text { Machine } & 5.77 & 0.49 & 11.7 & 0.00 & 4.67 & 6.87 \\\text { Hours } & & & & & \\\hline\end{array}$


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If the controller uses regression analysis to estimate costs, the cost equation for electricity costs is:

• A) Electricity Costs = $1,425.18 + ($12.00 × Machine hours).
• B) Electricity Costs = $3,726.88 + ($1,682.82 × Machine hours).
• C) Electricity Costs = $1,682.82 + ($0.49 × Machine hours).
• D) Electricity Costs = $3,726.88 + ($5.77 × Machine hours).

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