Clough Company Is Interested in Establishing the Relationship Between Utility

question 118

Essay

Clough Company is interested in establishing the relationship between utility costs and machine hours.Data have been collected and a regression analysis prepared using Excel.The monthly data and the regression output follow:
$\begin{array}{|l|r|r|}\hline \text { Month } & \text { Machine } & \text { Electricity } \\& \text { Hours } & \text { Costs } \\\hline \text { January } & 3,250 & 22,080 \\\hline \text { February } & 3,770 & 25,200 \\\hline \text { March } & 2,470 & 16,200 \\\hline \text { April } & 4,030 & 27,600 \\\hline \text { May } & 4,940 & 33,900 \\\hline \text { June } & 4,290 & 26,400 \\\hline \text { July } & 5,330 & 29,700 \\\hline \text { August } & 4,560 & 27,300 \\\hline \text { September } & 2,600 & 18,600 \\\hline \text { October } & 4,810 & 31,200 \\\hline \text { Nowember } & 6,110 & 37,200 \\\hline \text { December } & 5,460 & 33,300 \\\hline\end{array}$


Required:
(a. )What is the equation for utility costs using the regression analysis?
(b. )Does the variable "machine hours" have statistical significance? Explain.(c. )Prepare an estimate of utility costs for a month when 3,000 machine hours are worked.

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Definitions:

Outsourcing

The business strategy of hiring external firms or individuals to perform tasks, handle operations, or provide services that are traditionally done by internal staff.

HRM Function

Stands for Human Resource Management Function, encompassing a range of practices like recruiting, training, employee relations, and performance management to effectively manage an organization's workforce.

Downsizing

The process of reducing the number of employees within an organization through terminations, retirements, or divestitures as a means of reducing costs.

Offshoring

The practice of relocating business processes or services to another country, often to reduce costs or access skilled labor not available domestically.