Question

Greene

Corporation manufactures a drink​ bottle, model CL24. During

2017​,

Greene

produced

170,000

bottles at a total cost of

$714,000.

Young

Corporation has offered to supply as many bottles as

Greene

wants at a cost of

$4.10

per bottle.

Greene

anticipates needing

186,000

bottles each year for the next few years.

1.	a.	What is the average cost of manufacturing a drink bottle in 2017​? How does it compare to Young​'s ​offer?
	b.	Can Greene use the answer in requirement 1a to determine the cost of manufacturing 186,000 drink​ bottles? Explain.
2.	Greene​'s cost analyst uses annual data from past years to estimate the following regression equation with total manufacturing costs of the drink bottle as the dependent variable and drink bottles produced as the independent​ variable:y​ = $430,000 ​+ $2.00X During the years used to estimate the regression​ equation, the production of drink bottles varied from 159,000 to 196,000. Using this​ equation, estimate how much it would cost Greene to manufacture 186,000 drink bottles. How much more or less costly is it to manufacture the bottles rather than to acquire them from Young​?
3.	What other information would you need to be confident that the equation in requirement 2 accurately predicts the cost of manufacturing drink​ bottles?

Answer 1