The regression equation,y = $744.67 + $7.72X,could represent indirect manufacturing labor costs based on the number of direct manufacturing labor hours.

Question

Quizplus · Accepted Answer

The equation shows a linear relationship between indirect manufacturing labor costs (y) and direct manufacturing labor hours (X), suggesting a possible correlation between the two variables. The intercept of $744.67 represents the fixed cost or the amount of indirect labor costs that do not depend on the number of direct labor hours, while the slope of $7.72 indicates the variable cost, or the rate at which indirect labor costs increase per unit of direct labor hours. Therefore, the equation could be a reasonable model for predicting indirect labor costs based on direct labor hours, assuming that the relationship between the two variables is linear and that other assumptions of regression analysis are met.

The Regression Equation,y = $744