The Lindsey Company used regression analysis to predict the annual cost of utilities.The results were as follows:
$\begin{array}{ll}&\text { Utilities Cost }\
&\text { Explained by Direct Labor Hours }\
\text { Constant } & 5,000 \
\text { Standard error of } Y \text { estimate } & 595 \
\text { R-Squared } & 0.87 \
\text { No. of observations } & 30 \
\text { Degrees of freedom } & 28 \
\text { X Coefficient } & 4.02 \
\text { Standarderror of coefficient } & 0.81
\end{array}$
The linear cost function is ________ where Y = Total utilities cost and X = Number of direct labor hours.
A) Y = $5,000 + $0.87X
B) Y = $5,000 + $0.81X
C) Y = $595 + $0.81X
D) Y = $5,000 + $4.02X

Question

Quizplus · Accepted Answer

The linear cost function is determined by the constant and the coefficient of the variable (X). In this case, the constant is $5,000 and the X coefficient is 4.02, making the correct linear cost function Y = $5,000 + $4.02X.

The Lindsey Company Used Regression Analysis to Predict the Annual