Question: Dana Corp. uses linear regression to estimate costs. The machine hours and related costs for the last year, as well as the regression analysis results,
Dana Corp. uses linear regression to estimate costs. The machine hours and related costs for the last year, as well as the regression analysis results, are as follows:
| Month | Maintenance Cost | Machine Hours | ||||
| Jan. | $ | 4,450 | 580 | |||
| Feb. | 3,250 | 420 | ||||
| Mar. | 3,850 | 500 | ||||
| Apr. | 3,070 | 400 | ||||
| May | 4,600 | 600 | ||||
| June | 3,210 | 410 | ||||
| July | 3,280 | 420 | ||||
| Aug. | 4,720 | 620 | ||||
| Sept. | 4,510 | 590 | ||||
| Oct. | 4,300 | 570 | ||||
| Nov. | 3,550 | 450 | ||||
| Dec. | 3,410 | 440 | ||||
| Sum | $ | 46,200 | 6,000 | |||
| Average | $ | 3,850 | $ | 500 | ||
| Average cost per hour | $ | 8.00 | ||||
| a (intercept) | $ | 205.82 | ||||
| b (coefficient) | 7.2884 | |||||
| Standard error of the estimate | 34.469 | |||||
| R-squared | 0.99724 | |||||
| t-value for b | 60.1050 | |||||
If machine hours are 400, Aaron's manager can be approximately two-thirds confident that the range of the maintenance costs will be
Multiple Choice
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$3,060.72 to $3,181.61.
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$3,059.74 to $3,182.62.
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$3,086.71 to $3,155.65.
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$3,095.43 to $3,147.05.
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None of these answer choices are correct.
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