The Stanford Company incurred the following maintenance cost during a five month period: $\begin{array}{ccc}\text { Month } & \text { Production Volume } & \text {Maintenance Costs }\\hline
\text { June } & 75 & \$ 250 \
\text { July } & 115 & 310 \
\text { August } & 190 & 400 \
\text { September } & 60 & 240 \
\text { October } & 135 & 355
\end{array}$
Using a computer or calculator, compute the estimate of maintenance costs at 100 units of production using the method of least squares. This value would be
A)$291.
B)$321.
C)$336.
D)$698.

Question

Quizplus · Accepted Answer

The least squares method involves finding the line of best fit for the given data points, which in this case relate production volume to maintenance costs. The formula for the line is $y = mx + b$, where $m$ is the slope and $b$ is the y-intercept. Using the given data to calculate $m$ and $b$, and then substituting 100 for the production volume (x), the estimated maintenance cost (y) at 100 units of production is approximately $291. This calculation involves statistical computations that determine the line that minimizes the sum of the squared differences between the observed values and the values predicted by the line.

The Stanford Company Incurred the Following Maintenance Cost During a Five