Cameron Company is interested in establishing the relationship between utility c

Question

Cameron Company is interested in establishing the relationship between utility costs and machine hours. Data has been collected and a regression analysis prepared using Excel. The monthly data and the regression output follow:

Required: a. Using Excel, perform a regression analysis on the above data and generate a summary output. (Follow the instructions in your text book on pages 181-185).

b. What is the equation for utility costs using the regression analysis?

c. Prepare an estimate of utility costs for a month when 3,000 machine hours are worked.

Month Machine Hours Electricity Cost January 3,250 22,080 February 3,770 25,200 March 2,470 16,200 April 4,030 27,600 May 4,940 33,900 June 4,290 26,400 July 5,330 29,700 August 4,550 27,300 September 2,600 18,600 October 4,810 31,200 November 6,110 37,200 December 5,460 33,300

Explanation / Answer

(a)

(b) The regression equation is y = 4472.25 + 5.3287x

(c) When x = 3000, y = 4472.25 + 5.3287(3000) = 20458.35

SUMMARY OUTPUT Regression Statistics Multiple R 0.965383483 R Square 0.931965269 Adjusted R Square 0.925161796 Standard Error 1710.210876 Observations 12 ANOVA df SS MS F Significance F Regression 1 400652987.6 400652987.6 136.9837521 3.69356E-07 Residual 10 29248212.4 2924821.24 Total 11 429901200 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0% Intercept 4472.254716 2019.389688 2.214656607 0.051155592 -27.22588673 8971.735319 -27.22588673 8971.735319 Machine Hours (x) 5.328675517 0.455286472 11.70400581 3.69356E-07 4.314234044 6.343116989 4.314234044 6.343116989

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