The method of least squares was used to develop a cost equation to predict the cost of receiving. Ninety-six data points from monthly data were used for the regression. The following computer output was received:
Intercept .....23,100
Slope ......316
The driver used was number of parts inspected.
Required:
1. What is the cost formula?
2. Using the cost formula from Requirement 1, identify each of the following: independent variable, dependent variable, variable rate, and fixed cost per month.
3. Using the cost formula, predict the cost of parts inspection for a month in which 2,500 parts are inspected.