(Appendix 2A)Donner Company would like to estimate the variable and fixed components of its maintenance costs and has compiled the following data for the last five months of operations. (Appendix 2A)Using the least-squares regression method, the estimated variable cost per labor hour for maintenance is closest to:
A)$1.88
B)$1.52
C)$1.09
D)$1.96

Question

(Appendix 2A)Donner Company would like to estimate the variable and fixed components of its maintenance costs and has compiled the following data for the last five months of operations.  (Appendix 2A)Using the least-squares regression method, the estimated variable cost per labor hour for maintenance is closest to:
A)$1.88 
B)$1.52 
C)$1.09 
D)$1.96

Quizplus · Accepted Answer

The regression line is Y = 415.69 + 1.0942X and the R² is 0.8432 Therefore, the variable cost per labor hour for maintenance is closest to $1.09.

(Appendix 2A)Donner Company Would Like to Estimate the Variable and Fixed