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# Thane Company is interested in establishing the relationship between electricity costs

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

 Month Machine Hours Electricity Costs January 3,400 \$ 18,850 February 3,800 \$ 21,900 March 2,800 \$ 13,950 April 4,000 \$ 23,900 May 4,700 \$ 28,700 June 4,200 \$ 22,900 July 5,300 \$ 25,200 August 4,400 \$ 23,200 September 2,900 \$ 16,400 October 4,600 \$ 26,900 November 6,500 \$ 31,900 December 5,800 \$ 28,200

 Summary Output Regression Statistics Multiple R .928 R Square .862 Adjusted R2 .848 Standard Error 2,039.35 Observations 12.00
 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Intercept 4,492.22 2,479.75 1.81 0.10 (1,033.00) 10,017.44 Machine Hours 4.35 0.55 7.89 0.00 3.12 5.58

If the controller uses regression analysis to estimate costs, the cost equation for electricity cost is:

Cost = \$4,492.22 + \$2,479.75 × Machine-hours.

Cost = \$2,479.75 + \$0.55 × Machine-hours.

Cost = \$4,492.22 + \$4.35 × Machine-hours.

Cost = \$2,039.35 + \$12.00 × Machine-hours.

Feb 06 2020 View more View Less