The Cary Plant produces a part for agricultural equipment. The plant produces to demand rather than maintaining significant Inventories, so there can be significant fluctuation in monthly output. One of the significant cost Items is maintenance and repair (M&R) costs. M&R consists of both routine and unscheduled costs. The plant manager is trying to understand what effect production volume has on M&R costs and is getting conflicting Information from the machine operators (who believe that higher output is related to higher M&R costs) and the financial staff (who say that their analyses do not show this). Data on monthly output (In machine hours) and monthly M&R costs for the most recent two fiscal years follow: Month October November December January February March April May June July August September October November December Machine-Hours 223,560 235,980 397,440 310,500 385,020 558,900 273,240 360,180 285,660 298,080 322,920 186,300 211,140 322,920 372 600 M&R Cost $ 56,510 59,320 24,150 34,230 36,340 9,140 36,580 43,380 53,230 52,290 30,250 55,570 48,070 29,780 42 678

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question

Qa.1.

The Cary Plant produces a part for agricultural equipment. The plant produces to demand rather than maintaining significant
Inventories, so there can be significant fluctuation in monthly output. One of the significant cost Items is maintenance and repair (M&R)
costs. M&R consists of both routine and unscheduled costs. The plant manager is trying to understand what effect production volume
has on M&R costs and is getting conflicting Information from the machine operators (who believe that higher output is related to higher
M&R costs) and the financial staff (who say that their analyses do not show this). Data on monthly output (in machine hours) and
monthly M&R costs for the most recent two fiscal years follow:
Month
October
November
December
January
February
March
April
May
June
July
August
September
October
November
December
January
February
March
April
May
June
July
August
September
Regression Statistics
Multiple R
R Square
Standard Error
Machine-Hours
223,560
235,980
397,440
310,500
385,020
558,900
273,240
360,180
285,660
298,080
322,920
186,300
211,140
322,920
372,600
385,020
447,120
633,420
335,340
298,080
Observations
Coefficients
422,280
477,120
360,180
285,660
Intercept
Revenues
M&R Cost
$ 56,510
59,320
Required:
b. Using Excel, estimate a linear regression with maintenance and repair (M&R) cost as the dependent variable and production
(measured in machine hours) as the Independent variable.
24,150
34,230
36,340
Note: Negative amounts should be indicated by a minus sign. Round "Multiple R, R Square and Revenues to 5 decimal places,
"Standard Error" to 1 decimal place, and "Intercept" to the nearest whole number.
24
9,140
36,580
43,380
53,230
52, 290
30,250
55,570
48,070
29,780
42,670
38,220
15,940
230
41,740
35,870
22,040
28,140
28,140
42,190
Transcribed Image Text:The Cary Plant produces a part for agricultural equipment. The plant produces to demand rather than maintaining significant Inventories, so there can be significant fluctuation in monthly output. One of the significant cost Items is maintenance and repair (M&R) costs. M&R consists of both routine and unscheduled costs. The plant manager is trying to understand what effect production volume has on M&R costs and is getting conflicting Information from the machine operators (who believe that higher output is related to higher M&R costs) and the financial staff (who say that their analyses do not show this). Data on monthly output (in machine hours) and monthly M&R costs for the most recent two fiscal years follow: Month October November December January February March April May June July August September October November December January February March April May June July August September Regression Statistics Multiple R R Square Standard Error Machine-Hours 223,560 235,980 397,440 310,500 385,020 558,900 273,240 360,180 285,660 298,080 322,920 186,300 211,140 322,920 372,600 385,020 447,120 633,420 335,340 298,080 Observations Coefficients 422,280 477,120 360,180 285,660 Intercept Revenues M&R Cost $ 56,510 59,320 Required: b. Using Excel, estimate a linear regression with maintenance and repair (M&R) cost as the dependent variable and production (measured in machine hours) as the Independent variable. 24,150 34,230 36,340 Note: Negative amounts should be indicated by a minus sign. Round "Multiple R, R Square and Revenues to 5 decimal places, "Standard Error" to 1 decimal place, and "Intercept" to the nearest whole number. 24 9,140 36,580 43,380 53,230 52, 290 30,250 55,570 48,070 29,780 42,670 38,220 15,940 230 41,740 35,870 22,040 28,140 28,140 42,190
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 10 steps with 10 images

Blurred answer
Knowledge Booster
Breakeven Analysis
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education