Question

E E6-28A (similar to) Qucstion He opcrating costs so that she has beter idea ho do very distance a ects these costs Flower Mode doesa regression analys s on te next year's data uang E ceL The output gcncrated by Excel is as follows: Click the icon to view the regression anslysis) Determine the fms cos equation (se the cutput from the Excelregession) R-Gquara tusatha output tom thฉ Excal regression》 Wat does Flower Moda's R-squara indicata? 2. Datammina th 3. Predct van aperating costs at a volume of 17,000 mles ascuming the campany would use the cot oquation from the Excel rogression regardless of its R ccuarc. Should tha company rcty on this cas:estimate? Why or why nat? Regression analysis Requirerment 1. Detemine the firm's cost equation use the output from the Excel regression). Enter amounts to two decimal places SUMMARY OUTPUT Mutipic R 0.07 0.75 usted R Square 0.70 S andand Fmor 498,903 13 15.13 498 803.13 104,795 87 663,600 00 Stat P-value 82689 238 0.06 1.3 4,08989 3 89 D 34 x Varlabla Enter any number In the edlt flelds and then cick Check Answer Print Done Clear All

Answer 1

1 Firms cost equation using the regression data given will be:

Y = $0.20X + $1964.29

Here, Y is total cost, X is miles driven

2 R-Square = 0.75 or 75%, R-square represents the best fits of data models, if r-square is 0 then it explains none, and if 100%, then it explains 100% of variations. In the present case 75% r-square represents that regression explains 75% of variations i.e. 75% best fit or accurate.

3 For 17000 miles driven, cost will be, using equation determined:

Y = $0.20(17000) + $1964.29

Y = $5,364.29

Since this cost is accurate upto 75%, it should not rely on it for a reliable cost estimate it should be accurate more than 90%