Star, Inc. used Excel to run a least-squares regression analysis, which resulted in the following output: What total cost would Star predict for a month in which production is 2,000 units?
A) $23,140
B) $63,446
C) $175,003
D) $198,143

Question

Star, Inc. used Excel to run a least-squares regression analysis, which resulted in the following output:   What total cost would Star predict for a month in which production is 2,000 units?
A) $23,140 
B) $63,446 
C) $175,003 
D) $198,143

Quizplus · Accepted Answer

According to the regression analysis, the predicted total cost (y) is equal to $49,486 + $74.59(x), where x is the number of units produced. To find the predicted cost for 2,000 units, we substitute x = 2,000 into the equation and solve for y:

y = $49,486 + $74.59(2,000) 
y = $49,486 + $149,180 
y = $198,666

Therefore, the predicted total cost for a month with 2,000 units produced is $198,666, which is closest to answer choice D: $198,143.

Star, Inc Used Excel to Run a Least-Squares Regression Analysis, Which