An accountant wishes to predict direct labor cost ( y ) on the basis of the batc
ID: 3155670 • Letter: A
Question
An accountant wishes to predict direct labor cost (y) on the basis of the batch size (x) of a product produced in a job shop. Data for 12 production runs are given in the table below, along with the Excel output from fitting a least squares regression line to the data.
Find b1 and b0. (Round your intermediate value and final answers to 4 decimal places. Negative amounts should be indicated by a minus sign.)
b1 is the estimated (Click to select)decreaseincrease in (Click to select)batch sizemean labor cost for every 1 unit increase in
(Click to select)batch sizemean labor cost.
b0 is the estimated (Click to select)mean labor costbatch size when (Click to select)mean labor costbatch size = 0; (Click to select)yesno.
Write the least squares prediction equation. (Round your answers to 4 decimal places. Negative amounts should be indicated by a minus sign.)
Use the least squares line to obtain a point estimate of the mean direct labor cost for all batches of size 60 and a point prediction of the direct labor cost for an individual batch of size 60. (Round your answer to 3 decimal places.)
Direct Labor Cost Data Direct LaborCost, y ($100s) Batch
Size, x 983 61 450 82 249 28 614 6 977 20 248 88 351 97 375 79 598 58 1,024 17 323 38 964 59
Explanation / Answer
a)
Using technology, we get
b1 = slope = -4.263218251 [ANSWER]
b0 = intercept = 821.2180961 [ANSWER]
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b)
b1 is the estimated [[increase]] in [[mean labor cost]] for every 1 unit increase in [[batch size]]. [ANSWER]
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b0 is the estimated [[mean labor cost]] when [[batch size]] = 0; yes.
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c)
Thus, the regression line is
y^ = 821.2180961 + (-4.263218251) x [ANSWER]
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d)
Thus, if x = 60
Then
y^ = 565.425001 [ANSWER]
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