Cost Estimation. Hampshire Textiles, Inc., has just completed a cost study of its moire taffeta production facility. By regressing total variable costs per week on cloth output, one of their financial analysts estimated the following equation:
Here Q is moire taffeta cloth production in square yards and the numbers in parentheses are the standard errors of the coefficients. The R² for the equation was 80%, and the standard error of the estimate was 150 for the weekly observations over a two-year period.

Question

Cost Estimation. Hampshire Textiles, Inc., has just completed a cost study of its moire taffeta production facility. By regressing total variable costs per week on cloth output, one of their financial analysts estimated the following equation:

Here Q is moire taffeta cloth production in square yards and the numbers in parentheses are the standard errors of the coefficients. The R² for the equation was 80%, and the standard error of the estimate was 150 for the weekly observations over a two-year period.

Quizplus · Accepted Answer

The Answer of Cost Estimation. Hampshire Textiles, Inc., has just completed a cost study of its moire taffeta production facility. By regressing total variable costs per week on cloth output, one of their financial analysts estimated the following equation: Here Q is moire taffeta cloth production in square yards and the numbers in parentheses are the standard errors of the coefficients. The R² for the equation was 80%, and the standard error of the estimate was 150 for the weekly observations over a two-year period.