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 Direct Labor y ($1 71 663 381 138 861 145 493 548 251 1024 435 772 Batch 35 12 83 14 46 52 23 100 41 75 BClickherefortheExcelData File Batch Size Line Fit Plot 1000 + LaborCost 18.488+ 10.146 BSize 800 600 8 400 -200 0 100 Batch Stze

Explanation / Answer

Part a.

correct

Part b.

the coefficent, b0 represent y-axis intercept when x = 0, thus the b0 is the estimated mean labor cost when batch size is eual to zero. The coefficent b1 represent slope of line, that is increase in y value with unit increae in x value. Thus, b1 = 10.146 means, y increases by 10.146 units when x increased by 1 unit.

part b: mean labor cost, batch size, yes

increase, main labor cost, batch size

Part c: equation is given as : y = b0 + b1x

y = 18.488 + 10.146x

part d:

substitute x = 60 in equation, the y value is obtained as follows:

y = 18.488 + 10.146x = 18.488 + 10.146(60)

y = 627.26

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