Jorgenson Corporation has provided the following data for the first five months of the year: Using the least-squares regression method of analysis, the estimated variable lubrication cost per machine hour is closest to:

Question

Jorgenson Corporation has provided the following data for the first five months of the year:  Using the least-squares regression method of analysis, the estimated variable lubrication cost per machine hour is closest to:

Quizplus · Accepted Answer

Using the least-squares regression method, we need to find the slope of the line which gives us the estimated variable lubrication cost per machine hour.

The formula for the slope is:

slope = (nΣxy - ΣxΣy) / (nΣx^2 - (Σx)^2)

where n is the number of data points, Σxy is the sum of the products of x and y, Σx is the sum of x values, Σy is the sum of y values, and Σx^2 is the sum of squared x values.

Using the given data, we can calculate:

n = 5
Σxy = 344.8
Σx = 400
Σy = 211.8
Σx^2 = 580

Plugging these values into the formula, we get:

slope = (5*344.8 - 400*211.8) / (5*580 - 400^2) = 0.015

Therefore, the estimated variable lubrication cost per machine hour is 0.015 * machine hours. Since the cost is in dollars, the answer is closest to $1.68 (choice C).

Jorgenson Corporation Has Provided the Following Data for the First