For the previous problem, interpret the regression coefficient for labor by estimating the average final cost associated with each dollar that management identified ahead of time as being labor related.

Previous Problem.

Consider the computer output in Table 12.5.12, part of an analysis to explain the final cost of a project based on management’s best guess of labor and materials costs at the time the bid was placed, computed from 25 recent contracts. All variables are measured in dollars.

TABLE 12.5.12 Regression Analysis for Final Cost of a Project Correlations: Cost Labor Labor 0.684 Material 0.713 0.225 The Regression Equation Is Cost =13,975+ 1.18 Labor+ 1.64 Material Predictor Coeff tRatio StDev Constant 0.004 13,975 4, 286 3.26 Labor 1.1806 0.2110 5.59 0.000 Material 0.2748 5.97 1.6398 0.000 S= 3,860 R-sq=79.7% R-sqladj) =77.8% Analysis of Variance Source DF MS Regression 43.17 2 1,286,267,776 643, 133,888 0.000 Error 22 327,775,808 14,898,900 Total 24 1,614,043,648 Source DF SEQ SS Labor 755,914,944 Material 530,352,896