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Pearson Products Believes One of Its Costs Is a Mixed

Question 83

Essay

Pearson Products believes one of its costs is a mixed cost and has run a regression analysis which shows the following:
SUNLMARY OUTPUT
 Regression Statistics  Multiple R 0.963711945 R Square 0.928740713 Adjusted R Square 0.916864165 Standard Error 946.0983069 Observations 8\begin{array}{lr}\hline {\text { Regression Statistics }} \\\hline \text { Multiple R } & 0.963711945 \\\text { R Square } & 0.928740713 \\\text { Adjusted R Square } & 0.916864165 \\\text { Standard Error } & 946.0983069 \\\text { Observations } & 8 \\\hline\end{array}

ANOVA
 df  S S M S  F  Significance F Regression 169996575.4669996575.4678.199551530.000116235 Residual 65370612.038895102.0063 Total 775367187.5\begin{array}{llrrrr}\hline&\text { df } &\text { S S}&\text { M S }&\text { F }& \text { Significance F}\\\text { Regression } & 1 & 69996575.46 & 69996575.46 & 78.19955153 & 0.000116235 \\\text { Residual } & 6 & 5370612.038 & 895102.0063 & & \\\text { Total } & 7 & 75367187.5 & & & \\\hline\end{array}

 Coefficients  Standard Eiror  t Stat P -vahue  Intercept 11568.560001352.3900008.5541494690.000140059 X Variable 1 1.98000000.2239000008.8430510310.000116235\begin{array}{lrrrr}\hline&&\text { Coefficients } &\text { Standard Eiror } &\text { t Stat } & \text {P -vahue }\\\hline\text { Intercept } & 11568.56000 & 1352.390000 & 8.554149469 & 0.000140059 \\\text { X Variable 1 } & 1.9800000 & 0.223900000 & 8.843051031 & 0.000116235 \\\hline\end{array}

Required:
A. Write the equation to predict estimated total mixed costs.
B. If 1000 units are produced, what will be total mixed costs?
C. What does the 'R Square' number tell Pearson? Interpret the 'R Square' data for Pearson.

Correct Answer:

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