Problem%206-14

# Problem 6-14 - Problem614(45minutes 1 NumberofLeagues(X 5 2 4 6 3 TotalCost(Y \$13,000 \$7,000 \$10,500 \$14,000 \$10,000

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Problem 6-14  (45 minutes) 1. Number of Leagues  (X) Total Cost  (Y) 5 \$13,000 2 \$7,000 4 \$10,500 6 \$14,000 3 \$10,000 A spreadsheet application such as Excel or a statistical software  package can be used to compute the slope and intercept of the  least-squares regression line for the above data. The results are: Intercept (fixed cost). .................. \$4,100 Slope (variable cost per unit). ..... \$1,700 R 2 ................................................ 0.96 Therefore, the variable cost per league is \$1,700 and the fixed cost  is \$4,100 per year. Note that the R 2  is 0.96, which means that 96% of the variation in  cost is explained by the number of leagues. This is a very high R and indicates a very good fit. 2. Y = \$4,100 + \$1,700X 3. The expected total cost for 7 leagues would be: Fixed cost. .............................................................

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## This note was uploaded on 06/14/2011 for the course BUS 254 taught by Professor Favere-marchesi during the Fall '10 term at Simon Fraser.

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Problem 6-14 - Problem614(45minutes 1 NumberofLeagues(X 5 2 4 6 3 TotalCost(Y \$13,000 \$7,000 \$10,500 \$14,000 \$10,000

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