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Regression Problem 3

# Regression Problem 3

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10/25/2011

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MonthUtility CostLabor HoursMachine HoursJan \$2,527 4,1502,500Feb 2,515 4,0002,375Mar 2,654 4,3602,600Apr 2,593 4,2002,450May 2,455 4,0502,525June 2,509 4,1002,410July 2,557 4,2752,720Aug 2,588 4,2502,525Sept 2,540 4,0502,350Oct 2,707 4,5002,610Nov 2,731 4,6002,700Dec 2,697 4,3752,675Total 31,073 50,91030,4403.)Multiple RegressionLabor HoursMachine HoursR Square0.910.870.42Standard Error29.9633.3271.21Significance F000.024.) The best cost driver would have to be the set between labor and machine hours. The multiple regression has the highest R square and theresiduals show no sign of being part of a pattern, which tells me that the data is good. Standard Error for the multiple regression is also the lowestof the three, showing that it has the smallest distance between points. Despite the fact that the significance f is not the lowest on the multipleregression it is still very low and shows that the multiple regression between labor and machine hours would be the best choice for the data toexplain what the real cost driver is.

SUMMARY OUTPUT
Regression Statistics
Multiple R0.95R Square0.91Adjusted R Square0.89Standard Error29.96Observations12ANOVA
dfSSMSFSignificance
Regression279014.9339507.4644.020Residual98077.99897.55Total1187092.92
Coefficientsandard Errt StatP-valueLower 95%Upper 95%ower 95.0pper 95.0%
Intercept770.4205.723.740305.031235.76305.031235.76Labor Hours0.560.086.8900.380.750.380.75Machine Hours-0.220.12-1.840.1-0.50.05-0.50.05RESIDUAL OUTPUT
Observationicted Utility Residuals
12545.58-18.5822489.1725.8332641.3512.6542584.918.0952483.72-28.7262537.6-28.672566.66-9.6682596.25-8.2592522.917.1102717.87-10.87112753.99-22.99122632.9964.01

24502500255026002650270027502800-30-20-10010203040506070
Residual Plot

SUMMARY OUTPUT
Regression Statistics
Multiple R0.93R Square0.87Adjusted R 0.86Standard E33.32Observatio12ANOVA
dfSSMSFSignificance
Regression175987.7975987.7968.430Residual1011105.131110.51Total1187092.92
Coefficientsandard Errt StatP-valueLower 95%Upper 95%ower 95.0pper 95.
Intercept717.17226.543.170.01212.41221.93212.41221.93Labor Hou0.440.058.2700.320.560.320.56RESIDUAL OUTPUT
bservatio

icted Utility Residuals
12548.6-21.622482.432.632641.2712.7342570.6622.3452504.46-49.4662526.53-17.5372603.76-46.7682592.73-4.7392504.4635.54102703.053.95112747.18-16.18122647.8949.11