An accountant for a laboratory wishes to disaggregate the business costs into the variable cost per diagnostic
Question:
An accountant for a laboratory wishes to disaggregate the business costs into the variable cost per diagnostic test and the fixed cost than must be paid irrespective of how many tests had been performed. The accountant provides the following summary statistics:
mean Cost (£) 83,074 Tests 5,300
std. dev. 10,800 1,060
minimum 61,000 3,050
maximum 99,000 7,100
n = 12, correlation = 0.981.
Required-The accountant had proposed a variable cost of £8 per test when designing the budget at the beginning of the year. At the 5% significance level, assess whether or not the accountant’s proposed rate was reasonable given that the residual standard error from the fitted regression model is £2,190.
Business Statistics A First Course
ISBN: 978-0321979018
7th edition
Authors: David M. Levine, Kathryn A. Szabat, David F. Stephan