38. Prediction Intervals for Cost Estimation. Refer to exercise 21, where data on the production volume x and total cost y for a particu lar manufacturing operation were used to develop the estimated regression equation yˆ = 1246.67 + 7.6x.

a. The company’s production schedule shows that 500 units must be produced next month. What is the point estimate of the total cost for next month?

b. Develop a 99% prediction interval for the total cost for next month.

c. If an accounting cost report at the end of next month shows that the actual production cost during the month was $6000, should managers be concerned about incurring such a high total cost for the month? Discuss.