6. Kathryn\'s Moving Company prepares a regression analysis with the following r

Question

6. Kathryn's Moving Company prepares a regression analysis with the following results. A. What are the fixed costs and variable cost per mile based on the regression model output? Round the variable cost to the nearest cent (2 decimal places) and fixed cost to the nearest dollar (no decimals). B. Using the regression analysis output, what would the total cost be if Kathryn's Moving Company is projecting 5,500 miles for the month of June? SUMMARY OUTPUT Regression Statistics Multiple R 0.999748147 R Square 0.999496357 Adjusted R Square 0.999328476 Standard Error 26.26128657 Observations 5 ANOVA df SS MS F Significance F Regression 1 4105931.034 4105931.034 5953.6 4.79776E-06 Residual 3 2068.965517 689.6551724 Total 4 4108000 Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Intercept 1662.068966 48.3373992 34.38474128 5.4082E-05 1508.237788 1815.900143 1508.237788 # of Miles 0.84137931 0.010904406 77.15957491 4.79776E-06 0.806676625 0.876081996 0.806676625

Explanation / Answer

A. Here the value of intercept = Fixed cost

and value of slope is variable cost per mile

so Fixed cost = $1662

and variable cost = $0.84 per mile

B. Distance Traveelled in June = 5500 miles

so Total cost = 1662 + 0.84 x ( where x = no. of miles covered )

= 1662 + 0.84 * 5500

= $6282 would be the total cost.

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