The Shilling Company analyzed repair costs by month using linear regression analysis. The equation fit took the following form:

The results were
TRC = $20,000 €“ $0.75x
Average monthly repair costs have been $18,800, and machine hours used have averaged
1,600 hours per month. Management worries about the ability of the analyst who carried out this work because of the negative coefficient for variable cost.
What is your evaluation of theseresults?

Transcribed Image Text:

Tota ixed Repair Costs Variable Repair Costs Machine Hours l per Machine Hour Used × Actually Used during Month el during Month TRC a bx