Australian Airline Pilot Training School uses two different variables, in two di
ID: 2909665 • Letter: A
Question
Australian Airline Pilot Training School uses two different variables, in two different equations, to evaluate the cost of training each Airbus ready pilot. Variable 1 is the number of Pilot training hours and Variable 2 is the number of Pilots. The manager of
Australian Airline Pilot Training School has given you the most recent results for regressions run.
Pilot training hours: r2 = 0.56
Variable 1 Coefficient 1 Standard Error 1 t-Value 1
Constant 1 $913.32 $198.12 4.61
Independent Variable 1 $20.90 $2.94 7.11
Number of Pilots: r2 = 0.63
Variable 2 Coefficient 2 Standard Error 2 t-Value 2
Constant 2 $4,764.50 $1,073.09 4.44
Independent Variable 2 $864.98 $247.14 3.50
What is the estimated total cost if 15,000 pilot hours are used and there are 300 Pilots to be trained for the Airbus? Base your calculations on the Pilot Training Hours as the cost driver.
What is the estimated total cost if 15,000 pilot hours are used and there are 300 Pilots to be trained for the Airbus? Base your calculations on the Number of Pilots as the cost driver.
Explain the different outcomes. Which calculation is the best outcome and why?
Explanation / Answer
Variable 1 is the number of Pilot training hours and
Variable 2 is the number of Pilots.
by
y^ = 913.32 + 20.90 * Independent Variable 1
= 913.32 + 20.90 *number of Pilot training hours
= 913.32 + 20.90 * 15000
= 314413.32
for 2nd equation
y^ =4,764.50 + 864.98 * Independent Variable 2
= 4764.50 + 864.98 *300
= 264258.5
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