Degen Company Used Least Squares Regression Analysis to Obtain the Following

question 103

Essay

Degen Company used least squares regression analysis to obtain the following output:
Payroll Department Cost
Explained by Number of Employees
$\begin{array}{lr}\text { Constant } & \$ 7,540 \\\text { Standard error of } Y \text { estimate } & 819 \\\mathrm{r}^{2} & 0.8924 \\\text { Number of obærvations } & 20 \\\text { X coefficient(s) } & \$ 2.473 \\\text { Standard error of coefficient(s) } & 0.0966\end{array}$ Required:
a.What is the total fixed cost?
b.What is the variable cost per employee?
c.Prepare the linear cost function.
d.What is the coefficient of determination? Comment on the goodness of fit.

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