Ellington Corporation uses least-squares regression to analyze a variety of operating costs. A staff assistant determined...

Ellington Corporation uses least-squares regression to analyze a variety of operating costs. A staff assistant determined that monthly machine hours (MH) have a strong cause-and-effect relationship with total maintenance costs, and generated the following statistics: Intercept: $170,000 b coefficient: $3.80 Total machine hours for the year: 36,500

Required: A. Construct the company's regression equation. B. Based on your answer in part "A," identify Ellington's dependent variable and independent variable. C. What does the b coefficient really represent? D. Predict the company's maintenance cost in a month when 3,200 machine hours are worked.

Expert Solution

In regression equation Y represents the total cost ,

bo represents the total fixed costs,

b represents the variable cost per unit and

bX represents the total variable cost.

So ,the regression equation can be used to find the total cost of company.Y in regression equation represents Dependent variable beacuse it's value dependa upon the value of X it means Value of X determines the value of Y.

On the other hand X is independent variable as it's vvalue is not derived from the value of other variables.

ekkarill92 answered 1 year ago

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