An accountant wishes to predict direct labor cost (y) on the basis of the Batch

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 b_1 and b_0. (Round your answers to 4 decimal places.) Interpret the meanings of b_0 and b_1. Does the interpretation of b_0 make practical sense? Write the least squares prediction equation. (Round your answers to 4 decimal places.) 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.)

Explanation / Answer

a) b1=10.1463 b0=18.488

b) b1 is estimated increase in Labor Cost for every 1 unit increase in B size

b0 is estimated labor cost when Bsize=0

c) Lease square regression y=18.488+10.1463x

d)For batch size 60 the labor cost will be 627.266 hunders of dollars

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