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The “Significance F” result is very small, suggesting there is an extremely small probability that the
19
total production costs can be explained by no independent variables. This situation suggests that we will be able to
identify the relationship between total production costs and production.
X Y
20 Note that the intercept and the coefficient on production are both statistically related to total costs with
a p-value of less than 0.05 level (and a t-statistic greater than 2). These suggest that we have a reasonable model
for explaining the fixed and variable cost components of total costs. Given the regression results, we see the
intercept, which is the amount of fixed costs, is $6,185.38 per month. We also see that the coefficient on
production suggests that the variable cost is $0.513 cents per board foot.

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