Question

emaining Time: 24 minutes, 56 seconds Question Compietion Status Question 6 Amanufacturer has recorded its cost of electricity in dollars and the total number of hours of machine time for each of 52 week Scatter Diagram 1800 1600 1400 y 71.65x+ 263.4 :0543 1000 8 800 600 400 200 0 2 46 8 1012 14 16 Time

Answer 1

From the scatter plot below

we know that Y=Cost of electricity (estimated value)

X= Total number of machine hours of machine Time

for each of the 52 weeks

The relationship between Y and X are given in the regression equation

$Y=71.65X+263.4$

Using the above equation, the estimated cost of electricity when the total machine hours are zero (X=0) is

$Y=71.65\times 0+263.4=263.4$

that is even when the machines are not run, the cost of electricity is estimated to be $263.4. This is the fixed cost of running.

The fixed cost is estimated to be $263.4

Next we look at the coefficient of determination, indicated by$R^2$ value. From the graph we know that $R^2=0.543$

This indicates that 54.3% (which is 0.543*100) of the variation in the cost of electricity is explained by the change in total number of machine hours of machine time.

ans: The fixed cost estimate is $263.4, and the coefficient of determination suggests that 54.3% of the change in the cost of electricity is explained by the change in total number of machine hours of machine time.