Question

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	3,000	$	18,650
February	3,400	$	21,500
March	2,400	$	13,750
April	3,600	$	23,500
May	4,300	$	28,500
June	3,800	$	22,500
July	4,600	$	25,000
August	4,000	$	23,000
September	2,500	$	16,000
October	4,200	$	26,500
November	5,600	$	31,500
December	5,200	$	28,000

    

Summary Output
Regression Statistics
Multiple R	0.952
R Square	0.906
Adjusted R2	0.897
Standard Error	1,676.51
Observations	12.00

	Coefficients	Standard Error	t Stat	P-value	Lower 95%	Upper 95%
Intercept	3,639.33	2,048.60	1.78	0.11	(925.25)	8,203.90
Machine Hours	5.04	0.51	9.83	0.00	3.89	6.18

Based on the results of the regression analysis, the estimate of electricity costs in a month with 2,700 machine hours would be: (rounded to the nearest whole dollar)

Answer 1

Answer : $ 17,247.33 (or) $17,247.

Cost Equation :

Total cost = Intercept +( Machine hours co-efficient * Machine Hours )

Total Cost = 3,639.33+( 5.04*2700) =$ 17,247.33